 Good afternoon, everybody. Welcome to the Vermont State Senate Committee on Institutions. Today is April 27, 2021. I am your host for this afternoon's events. Joe Benning, your chair of the committee. We also have with us committee members, Senator Mazza from Grand Isle. Senator Engels from Essex, Orleans, Senator McCormick from Windsor and Senator Parent from Franklin County. We are continuing our conversations as the session for this committee winds down with getting some updates on various parts of how the capital bill is eventually put together. And today we have to start off the batting order Chris Rup is going to tell us all about the current information about pension plans. The intentions for the edification of those watching on YouTube have something to do with this committee's ability to make payments to the various organizations that come to us because they are part of the process of what the treasurer goes through to figure out exactly how much we can bond for. Keeping the committee abreast of these kinds of external issues is important before we leave for the year. And Chris, that means I'm going to turn the floor over to you and you can educate us on what you came to us with today. Thank you, Senator Benning. For the record, my name is Chris Rup and I'm an analyst with the Joint Fiscal Office. I've had the great pleasure of spending some quality time with Senator Mazza and Senator Engels over in the Transportation Committee but this is a new committee for me so. Wait, wait, wait, wait, let everybody know which chair you prefer okay when we're all done. At the very end yeah if we see his credibility his credibility just went out the window and he said great time with you two guys. Have you ever gone sailing on a ship before don't go with Senator Benning. We take you on a three hour tour. And by the way we do like humor in this. Bring your school bag here. That's great. So welcome to institutions a better committee than transportation. Thank you very much. I'm going to go ahead and share my screen here. So I have, I don't have a lot of slides today I have my goal here was to really provide sort of a high level overview of about a dozen slides and leave some time for some questions. For members of the public and maybe viewing online or members of the committee who would like to take a deeper dive into pension topics I have done a series of presentations for the other body. And those slides and the videos are available on the jfo website so I can go on and on about pensions but I'm not going to. I'm going to try to stay out of the weeds too much today because like I always say when I'm doing these things, you know I'm not a lawyer an actuary or an investment advisor, you know I'm a fiscal analyst for the legislature. So I came here though I worked for the city of Philadelphia for quite a while, and one of my responsibilities down there was being a voting trustee on the city of board of pensions and retirement so I did that for about two and a half years so I have a little bit of familiarity with how pensions work and sort of the ins and outs of it and some of the challenges that face, you know states like Vermont. Let's just start off with a really quick overview of how the pension systems here in Vermont or govern. The state has three major pension systems, and they each have a board of trustees, according to statute, their memberships vary slightly but the overall theme is that the employee representatives play a pretty significant role in the decision making process. The three boards of trustees along the right side of this slide are tasked with the general administration and operation of the retirement systems, and for adopting various actuarial recommendations. The trustee boards also play a role with choosing members to serve on VPIC, the Vermont Pension Investment Committee. This is a body that oversees the investment and management of all the plan assets, and the treasurer serves on all of these boards, and they all must agree to changes to the assumed rate of return. But at all levels, members of the retirement system the members themselves sit at the decision making tables and play a significant role in the governance of the retirement systems. I was talking about pension so much this session. This slide summarizes the immediate issue at hand. Both the state employee and teacher pension systems are facing significant and growing unfunded liabilities. And as a reminder, the unfunded liability represents the gap between the value of the plan assets and the expected cost of the retirement benefits that have been earned by the active and retired workforce. Right now visors is only 66.4% funded, and the teacher pension is 51.3% funded. The unfunded liability across these two systems is almost $3 billion, and that gap will ultimately need to be closed by the end of the amortization period in 2038. And just recently the unfunded liabilities have increased by approximately $604 million from FY 21 to FY 22, and that increase caused the employers required annual payment to the pension systems called the ADAC to increase by roughly $96 million this year compared to last year. And the number the ADAC payment is the amount the employer must pay in every year to fully fund the normal cost, plus make a payment toward that unfunded liability. So when the unfunded liability gets bigger, the ADAC payment gets bigger too. It works almost like a credit card. The balance on your card is the unfunded liability, and the ADAC is the amount you need to pay to pay down that balance with interest. And these amounts are recalculated every year. So why did these numbers go up so much? It was due to a combination of factors. Economic assumptions were revised, including lowering the assumed rate of return from 7.5% to 7%. Demographic assumptions were also revised. And these revisions were prompted by the fact that in recent years, the demographic and economic experience of the plans has deviated quite a bit from the assumptions. And the assumptions for the future have changed. In other words, we did not consistently earn the investment return we thought we would in the past. And the future investment outlook looks less rosy than it looked in the past. The behavior of the workforce also differed from what was previously assumed. And forward looking assumptions were revised to hopefully be more realistic in future years. So in the bigger picture, the state's long term retirement liabilities have more than doubled since the current amortization period began in 2008. Right now, the total unfunded retirement liabilities, including pensions and OPEB or subsidized retiree healthcare amounts to more than $5.6 billion for approximately $9100 per Vermonter. Pension liabilities alone have increased more than six-fold from $700 per Vermonter in 2008 to $4800 per Vermonter today. And subsidized retiree healthcare or OPEB, which we currently do not pre-fund, adds another $4300 per Vermonter of unfunded liability to the state's balance sheet. Rating agencies look at factors like this when analyzing and determining state credit ratings, and these unfunded liabilities are not trending in a positive direction. As these unfunded liabilities have grown, they've added stress to the budget. The unfunded pension liability must ultimately be paid off, and it has grown much faster than the overall payroll or size of the active workforce has grown. As a result, costs related to pensions are eating a larger slice of the budget pie. In total, our retirement liabilities consume more than 13 cents of every general fund dollar, up from 10.5 cents four years ago. Pension costs now consume almost $200 million or more than 10% of the general fund. OPEB, that subsidized retiree healthcare, consumes an additional $50 million. Most of the general fund impact is related to the teacher retirement systems, because the general fund is for the teacher OPEB and the unfunded teacher pension liability. Visors retirement costs are allocated to the various funds that employ the active workforce, so only about 40% of the visas costs, it's the general fund. So these liabilities and costs are substantial, but it's important to note that this was not always the case. When you go back 15 years before the Great Recession, both of those systems were close to fully funded. Visors was actually 100% funded in 2007 and the teacher system was in the mid to high 80%. But since 2008, when the current amortization period started, future pension costs have grown faster than the pension assets have grown, and the costs have grown faster than the active payroll. As a result, the size of the gap between the asset and liability lines on the charts here, which is the unfunded liability has grown. The unfunded liability represents the debt that ultimately needs to be addressed by the end of the amortization period, which is 2038. It's important to note that this gap has grown, despite the legislature fully funding its required payments since 2007. But closing this growing gap will require higher ADAC payments in the future. Here you can see how steeply the pension payments have grown in recent years. The legislature has fully funded these growing ADACs every year since the start of the amortization period, and in some years paid excess amounts. But the funded ratio has still declined year after year, the hole has gotten deeper, thereby requiring higher payments in future years to make up the difference. As these pension costs have increased substantially, those costs have primarily fallen on the employer. Employee contribution rates have not increased in recent years, and neither has the size of the active workforce. But the cost to the employer has increased significantly, because the employer currently assumes the full risk when assumptions change, or those assumptions are not met through experience. When systems miss their investment targets or their assumptions change, those additional costs fall on the employer to pay by default. And again, I want to stress that these recent increases are not related in any way shape or form to anyone underfunding the pension systems, because the employer has fully met its obligations every year during the amortization period. On the right side of the slide, focus just on the normal cost, which is the amount you need to pay to the pension fund every year to fund the future years worth of benefits that the workforce accrued that year. Employee contributions fund a portion of the normal cost. They do not pay down the unfunded liability, which is the employer's responsibility. In recent years, that normal cost has grown due to changes in assumptions, and as a result, employee contributions now cover roughly half of the normal cost. The other half of that cost, plus the payment toward the unfunded liability are paid by the employer through that annual ADAC payment. So if everyone has been paying in their required amounts, why have the unfunded liabilities grown so much since 2008? The top chart shows you the impacts on both systems since 2008 and includes the impacts of the Great Recession. And the bottom chart shows you just what has happened since FY 11 to exclude the impacts of the Great Recession. At the top here, you can see how the VCIR system was once fully funded. Its unfunded liability was negative $11 million. The teacher system started the amortization period with an unfunded liability of roughly $275 million. The reason why the teacher system had a higher starting unfunded liability was because the ADAC was fully funded during just four years between 1979 and 2006. And until 2014, teacher OPEB costs were paid out of the retirement system, which created additional unfunded liabilities. These things did not happen to the state employee system, but the ADACs have been fully funded for both systems throughout this amortization period. But if you add your way down these columns, you can see here how changes to assumptions such as changing the assumed rate of return or changing your demographic assumptions, investment experience falling short of your assumptions, you know, mainly your assumed rate of return, and demographic experiences deviating from assumptions have had on the growth of the unfunded liabilities over time. And to see just how big the impact of the Great Recession was, compare the investment experience totals in both charts. There are slides at the very end of this deck that break out these factors in greater detail, and that information was also included in a report that the Treasurer released on January 15th. And they're also in the most recent experience studies. So why did this experience deviate from assumptions so much? Well, both systems faced a lot of demographic changes, right around the same time period that the funds were battered by the graders. Both pension plans have matured quite a bit. That means that the number of retirees drawing benefits out of the system is increased a lot while the number of active employees paying in has not increased so much. So the number of retirees on the visa side has increased by approximately 63%, and the increase has been by 77% on the teacher side. Meanwhile, the size of that active workforce is not really grown on the state side, and it actually decreased on the teacher side. So overall, fewer people are paying in and more people are getting paid out. The payments out of those systems have grown faster than member contributions and now exceed payments made into the systems from the employer and from the members. This requires money to be taken out of the investment portfolio in order to fully fund retirement benefits every year, which makes it harder to make up ground and close that unfunded liability gap. The average retirement benefit is also grown, and it's around $21,000 a year. But a lot of this growth is due to the fact that we've seen so many more retirees entering the system at higher average salary rates than people who have been in retirement for longer periods of time. Here we see this dynamic play out in a slightly different way. The systems have seen positive income every year since 2009 from employee and employer contributions and from investment returns, with the exception of the investment losses in those great recession years. However, the amount paid out in benefits has steadily increased too, as more people have retired. This combination, which you can see on these charts, creates a headwind that slows the growth in the market value of assets from year to year and makes it harder for the systems to dig out of that hole and close that unfunded liability gap through investment gains. If you want to improve the funding ratio of the plants and close that unfunded liability, you need your asset growth to not just be positive. You need it to be higher than the growth rate of the pension liabilities. In other words, your money needs to grow faster than your expenses are growing. And that just has not been happening. My final chart shows you the big picture and speaks to the cost of an act. If nothing changes, pension costs to the state will keep increasing between now and the end of the amortization period in order to dig out of that hole. We are looking at a combined total aid act payments for visas and vsters of roughly $316 million in FY 22, which is far higher than it was just a few years ago. This amount will grow to approximately $500 million by the end of the amortization period, and that's assuming that the hole doesn't get any deeper. In other words, we are assuming that all the assumptions are consistently met between now and then, and that current assumptions don't change. These costs are recalculated every year based on experience and will increase if assumptions are not met and decrease if assumptions are exceeded. But this is the most, this is the status quo situation assuming everything goes exactly as planned. And if we've learned anything from looking at the last decade, it should be that things rarely go exactly as planned. There's always inherent risk that your costs will go up or go down. So the ADAC will keep crowding out other budgetary priorities in the future. And on top of that failure to address the liabilities can also have negative impacts in the state's bond ratings, which can lead to additional fiscal pressures. When the rating agencies look at states, they consider things like their fiscal management, economic fundamentals, their demographics, their future growth projections, and the structural budgetary challenges facing the state, the ability of the state to respond to those challenges and to respond to anything unforeseen. Vermont has already had its ratings outlook downgraded due in part to its growing retirement liabilities. Unfortunately, the latest round of ratings has helped steady. It does take decades of financial discipline to build and maintain strong bond ratings and it can be lost very quickly. All of which should underline the importance of taking these liabilities seriously and ensuring that steps are taken to address them. That requires everything on one slide. Since the Great Recession, the retirement liabilities have grown significantly and much faster than the plan assets have grown. Demographic pressures have had a lot to do with this. We've seen a very large growth in the number of retirees and the size of their benefits, though the state's pension benefits on average remain relatively modest. And this happened while the systems were trying to claw back from the impacts of the Great Recession. We've also seen the demographic experience of the workforce lead to higher than originally assumed costs. Changes were made to assumptions that will hopefully lower future risk to the plans, but they've also led to higher costs. As the number of retirees has grown, the systems are paying out more and more and benefits each year, more than employees and employers are contributing into the systems. The employer's assets can be pulled out of the investment portfolios to make up that difference. These factors all combine to just make it harder to dig out of the hole caused by the recession, or to make rapid progress for paying down the unfunded liability. They also increase the risk to the employer of higher ADAC payments when you don't hit your assumptions or the assumptions change. The most optimistic investment assumptions and failure to meet those assumptions certainly contributed to the growth in unfunded liabilities, especially when you include the fact that the Great Recession occurred during this amortization period. Failure to consistently hit those assumptions, as well as lowering the assumptions for the future, both led to higher liabilities and higher ADAC costs. A lot of people talk about the historic underfunding of the pensions, which mostly happened on the teacher side, along with the old practice of paying for OPEB out of the teacher retirement systems. This did contribute to the cost of the ADAC, and the fact that the teacher system has a lower funded ratio than the state system, which again was fully funded at the start of the amortization period. But this history did not lead to the enormous growth in liabilities from FY21 to FY22, or to the vast majority of the growth in the unfunded liability that happened since the start of the amortization period. Rather, the growth was mostly due to those other factors like investment performance, demographic experience, and changes to your assumptions. In many other pension systems, the state systems lower their assumed rate of return to 7%, to more realistically match anticipated investment performance in the future. This might have the benefit of leading to less substantial deviations between experience and assumptions in the future, which would translate into lower risk of drastically higher ADAC payments from year to year. But this change certainly had a significant impact on increasingly unfunded liability and ADAC payments from FY21 to FY22. And it also lowered the funding ratio for both plans, because this change means that the plans expect to earn less from investment gains in the future, thereby requiring higher employer payments to make up the difference. So that's the end of my slide deck. If you have any other questions, I'd be happy to answer them now, or you can also feel free to send me an email at this address at your convenience. I've also added some additional slides at the very end of this deck that Denise can send around with some additional data. And I also have a link here that goes to much more longer and more detailed presentations I give on pensions at session. But I appreciate your attention and look forward to answering any questions that you may have. First, thank you for putting together a pretty succinct set of PowerPoint presentations about what the problem is. I don't know if you can put a period on the end of this conversation yet or want to stick your neck out that far but last year, I spent quite a bit of time telling virtually every witness who was coming into our committee asking for money. A strong possibility the amount of money we were going to be able to bond for was going to be considerably less. Much to my surprise the treasurer came back and gave us exactly the same thing we did last year. Are you able to say whether that may be different next year. That's a great question I think that really depends on what happens on the revenue front. You know, I think in all fronts whether you're talking about pension investments or just the state of the economy in general, I think there's a great deal of uncertainty about what the next you know 24 to 36 months could look like, you know in a status quo situation. If we always hit all of our assumptions you know we always hit that assumed rate of return. The exact payments will increase by roughly 3% a year, and that's because of the way the statute is set up with our amortization schedule so unlike your home mortgage where you might pay the same amount every year for 30 years. We have our we have what's called a level percent of payroll system, where you assume that payroll will grow by three or three and a half percent a year depending on the system, and the unfunded liability payments are structured to increase at that same level. So the theory is that from year to year, it would not consume a greater share of the pie and it would just grow with overall budget growth. Having said that, you know that all depends on you hitting your assumptions consistently and having no risk. So you know it sounds like the the investment performance is pretty good so far this year. It always comes out to how do things shake out on a fiscal year basis, and then we recognize our gains and losses they're smoothed out over a five year period. So you know you might have a rock star year and the stock market one year, but you don't that those gains are recognized 20% a year for the next five years so now I think it's it's hard to say right now, I do think that these changes and assumptions likely lead, you know, are a little bit more conservative in nature, which means there's probably a little less risk of missing some of your assumptions from year to year. And one of the proposals that is before the legislature, it's currently and it was passed out of house, the house last week and it's now in Senate government operations is to move what they call experience studies from a five year cycle to a three year cycle. Those experience studies are when the actuaries take a look at what happened in the fund. They reconcile it with your assumptions, and then they make a recommendation on whether or not your assumptions should change. The intent behind doing them a little bit more frequently is so you don't have as long of a time period where your experience might be lagging what you thought would happen, because a big reason why we've seen these big jumps from year to year is because we did the assessment studies, and then we did our valuation studies assumptions were revised, and this was the result of those revised assumptions. Were there changes in investment strategy that gave give you the impression now that we're doing a little better than we had in the previous few years. Very question this has come up a lot in the respective government operations committees and the chair of VPIC has come in and testified, you know, quite a few times. You know, I think in recent years they've done a few things they've, they've moved to less expensive money managers. Right now that they have a very, very large percentage of the portfolio is is indexed at pretty low fee funds, and the percentile of our performance relative to other comparable pension systems has increased pretty significantly. So, you know, I haven't been around long enough to have the history of all these conversations around how the investment strategy has evolved, but they have certainly improved their performance in recent years, compared to where we were maybe a decade ago, both relative to our peers, and in terms of you know just cutting cutting your costs you know invest smarter invest in less exotic high fee things that are not proven to sort of beat the overall market. But you know this is something that I think the pick really focuses on very intentionally, because you want to hit your assume rate of return consistently within, you know an acceptable level of risk, you know the least amount of risk and volatility that you can possibly Okay. Senator Mazum. That's great Chris I just something to explain to me I can understand this was a great overview. What what Dave coaches my neighbor and he's been promoting a defined that pension plan is that not defined define contribution. Yeah, a contribution would you help me explain that. It seems to be around for a while and what would that do. So there's two big models out there in government there's there's what, and including in these pension systems sort of the dominant models called a defined benefit. And it kind of sounds like it's what it kind of sounds like your retirement benefit is defined by a formula. So that formula is based on things like how long you've worked how many years of service you have what what your benefit multiplier is, and what your average contribution was, you plug all those factors in, and you can get an estimate of what your retirement benefit will be, you know, in retirement, defined contribution sort of flip set equation where your benefit is really not defined by a formula it's not defined by how much money is in your account. So, there will be a system where in a DC plan which is more prevalent in the public in the private sector. The employee may make a contribution to their retirement account out of their paycheck. It may be matched by the employer to some percentage, and then you know your, your balance in your account. So when you retire to determines what you'll have available for retirement. So the risk shakes out in a different way so with a DV plan the risk falls on the employer, if your assumptions aren't met. In a DC plan, the risk falls on the employee. There's pros and cons to both models they appeal to different segments of the workforce, you know, not a DV plan may appeal to somebody who might have a 30 year career horizon, which with the same employer which is likely a little bit more common in the public sector than in the private sector, a DC plan probably offers you a little more portability. So if you might work from place to place, you know that allows you to sort of take your money from place to place. But you know it's at the end of the day that they function differently, the risk falls on on the parties differently. And if you moved everybody over to a DC plan today, it would not solve this overall challenge you know that this unfunded liability represents the cost of really paying for the contractual obligations that the state has made with its active and retired workforce. Thank you. Are we making, are we making 7% now are we are we meeting our goals. Nobody's been able to tell us that. So, so far this year, we're above 7%. And what like I said they reconcile this on a fiscal year basis so so what what percentage you come out at is really sort of endpoint sensitive it depends on what time period you're looking at so for consistency. And they look at on a fiscal year basis, and basically smooth out the volatility over a five year period, because you know you might have a year where you do 12%, you might have a year where you do 2%. You know you don't want your, your budgetary issue, your budgetary contributions to fluctuate that much from year to year so it's pretty common and plans to smooth that out over a period of time. So we have not always been meeting our assumed rates of return. They've sometimes been higher, much higher than they currently are. But you know, one of my slides showed that when you back out the great recession years that that's been a contribute missing our assumptions has been a contributing factor but not nearly as large as missing other assumptions, and and lowering that So whenever they do that assumed rate of return. They take a lot of things into consideration a lot of it is influenced by federal monetary policy you know what are your interest rates going to be, what do you think inflation is going to be, and what is sort of the outlook of the capital markets in the future so it's, it's not as backward looking, it's more sort of forward looking, and it really depends a lot on what what people's outlook of the future market is. And that business for a while is three years looking back too long before you adjust that or what do you think. No I mean it's hard to do one or two, I think three is better than five just because you have the opportunity to get, get to it more often. And I think that probably why we look five further along as after three rough years you probably have tough political decisions to make like 0809, maybe 10. You know I mean but it doesn't make a lot of sense. You, you want to be monitoring performance quite consistently. Thanks. I'm not a player, obviously, but what, what modest investments, my wife and I have made over the same period with them pretty well. I'm surprised why, why is the, are our pension plans. Why have they done so poorly and part of that question is things were going pretty well. And in 2007 things were still going pretty well then you get the catastrophe and away. And of course Obama inherits that, but that bottomed out in 09 to give credit mainly to the Federal Reserve but also to Bush and Obama who had the good sense to follow there are problems with the bailout, but it did seem to work. And then throughout the Obama and most of the Trump years, the country is in a slow, steady improvement. And it's really until coven that things had itself. So why did, why were our return so disappointing in that context. That's a great question. I'm the, the simple answer is, you know, pension funds, like a lot of other institutional investors invest very differently than you or I would. You know, I'm 34 years old, I'm not going to need my modest retirement savings for a really long time. So I can put all my money in equities and stocks, which, you know, tend to have, you know, over time one of the stronger returns but some of this, the most negative returns are to your volatility and risk. And I can let it right because I don't need that money to work for me. When Europe, and you know, I can afford to have a couple years of negative returns, because I have a long time horizon to make it back. When you're taking a look at a pension system, they're intentionally very diversified where, you know, they don't put everything in domestic equities, though, they need to also put things into, they need to put assets into things that protect you from downside risk, things that are liquid, especially when you're paying out so many benefits right now, and things that sort of act as that ballast in the ship, if you will, that that keeps you afloat when when the waters get choppy. So there are times when you'll have asset classes that might be booming might have, you know, 20 plus percent returns, you'll also have some asset classes that might be in, you know, negative returns or single digit returns. And every single year, who's highest and who's lowest in your asset class will change. So the goal whenever the investment consultants are trying to build your investment portfolio is what it what can we put what strategy can we put together to consistently hit that assume the rate of return over time, because when you're putting so much out in benefits every year, and your funded ratio is down in the 60s and 50s, you can't afford years of negative returns. You know, you can afford years of maybe 5% when you're hoping for 7%, but you need to really make sure that you're being conservative, and you tend to sacrifice risk and volatility in order to get that conservatism so they invest a little differently. It looks to me like that is not what happened with the pension funds. You've described what I understand as conservative lowercase C conservative investment. And what you're doing is you're giving up the big kill in exchange for avoiding the catastrophe that you're looking for something steadier and safer. So, I'm still confused why would, and it looks like our performance of our investments were markedly worse than the economy as a whole. And I would expect that if we were taking crazy risks. I think it's a really fair question and the chair of the pick is a great witness to invite in if you'd like to hear about this in more detail I can tell you that pension systems nationwide, including the one that I came from in Philadelphia. And I think this was the case here too. Now you go back 10 years a lot of people invested money in, you know what are called sort of alternative investments things like hedge funds, things that aren't particularly liquid and tend to be high fee. A lot of plans including here have pulled out of those in recent years, because they've realized that, you know, you tie up a lot of money that, and you pay a lot of money and fees, and they don't always have a proven track record of beating passive investment. That's way, that's way less expensive so I think, you know, this is not something that you can steer the ship completely in a different direction overnight. The state has made some pretty significant steps at, at bringing more of their portfolio into less risky, lower cost investment vehicles, and we have seen the returns improve. Having said that, you know, you're absolutely right that, you know, the economy has done pretty well since the great recession, domestically, you know, global events factor into federal monetary policy and interest rates have an impact on on things, especially when you look at sort of the fixed income market, Brexit has an impact, you know, things that things that happen in Europe and in the developing markets have a bigger impact in sort of domestic pension funds, then they once did 30 or 40 years ago. So, you know, I think it's been it's a combination of those factors but if you want to hear more about the sort of investment strategy over the last few years. I would, I would encourage you to reach out to the chair of the pick because I think he's got a lot of really interesting insights to share about the various steps they've taken in the last four or five years or so. One last question Mr Chairman and then I'll shut up the, the you'd said that that a defined contribution approach will not solve our present problem. But my understanding is going forward. It would at least not make it worse, as opposed to a divine defined benefit could. No, I think I think the benefit to a defined contribution plan from the for the employer is that you don't have the risk of an unfunded liability building up the way you do with the defined benefit, you know, you make your, your matching contribution to an employee's DC plan on sort of a pay as you go basis and then you know what happens in the market affects the employee, then the employer is not necessarily on the hook to pay more or less. So, yeah, that, that is the, the advantage on the employer side of a DC plan, you know, it doesn't however do anything to address the hole that we're dealing with now that unfunded liability that that that is due to the people who are who have been or currently working. So, so that that's why it won't do anything for that but as impacts going forward. There is the small, there is the small matter of breaking promises to people making deals of people of what the terms of their employment are, given them the bad news that well maybe not. Or, but that's what it just purely. What's that, or go bankrupt. Yeah, well I'm saying, yeah, from a fine from the financial point of view, the alternative is worse. We're happier we're happy. The taxpayers are happier with defined contribution, I get that. Or you had your hand up I don't know if you still have a question for a comment. Oh, my. Yeah, I do I don't know if my internet middle slow. Chris, you know it's, it's, you know, no use to cry over spilled milk. But doing analysis on the fees that we did pay for investments for the last 10 years so that we can memorialize it and never, you know, hopefully make the same mistake again. That's a great question. I have not done any analysis on it I can tell you that the fees are typically reported in the treasurer's on the treasurer's website under under pension funds, they put their quarterly performance reports up. And you can see what the fees look like there. Generally, I think the last one I looked the fees are like, less than a fifth of a percent. You know, in terms of the overall size of the funds they're not particularly large. I've not gone back you know 10 years, 10 plus years and and compared them. So I do think that would be an interesting exercise. I just wonder I I'm on a pinch, not a pension committee but an endowment committee for my local hospital we just changed advisors really because you know they were charging close to a point, we were able again to go to a more passive investment strategy and save the save that you know, cost if you will. Yeah, and I and I wouldn't I wouldn't make again you know I'm not a I'm not a licensed financial advisor anything like that I would I would caution that you know what the right approach really varies by every different fund. And you know there are some funds that are very comfortable putting all their money and sort of index passive funds that are really really low fee. And you know there are some funds that are that are more comfortable having a more diversified strategy. You know I think there's a lot of factors that go into that decision a lot of it's just how does your fund behave how mature is it. How, how, how liquid do you need your assets to be. And you know what's your tolerance for risk and volatility, it'll look real different if you're starting a new plan or if you have a plan that doesn't have a lot of sort of drain on the money for benefit payments, as opposed to something that you can kind of set it and forget it and you don't need to take a whole lot of the portfolio but having a having a laser like focus on fees and making sure that you're, you're not overpaying for performance is really is a really really critical thing. And then, you know one other piece that kind of pull out your presentation that I don't know if you can comment on but since I was in middle school I'm about your age, we were down 30,000 students and had we had those 30,000 students in the classrooms. We'd have more teachers working paying into the fund granted somebody to have more a lot of these built around pyramid model population schemes where the population grows, and not the other way around and we're seeing the inverse of that. So, is that accurate to assume that how do we had a growing population and more workers, you know, we potentially would be funding this. Yeah, it kind of cut. It's an interesting question it kind of cuts both ways because you know you'll, whenever you have more active employees you also have more people who are likely to get a benefit in the future. Yeah, I think the key point is, you know, a really, really mature plan where you have more people drawing a benefit than you have actives hanging in behaves a little differently than a newer plan. You know, they don't, they don't turn around quite as quickly. And, you know, their tolerance for risk changes a lot and that obviously impacts your investment strategy. You know, one of the biggest things we've seen really impacting the plans goes back to demographic changes and, and a big factor is that turnover. You know, the prior assumptions thought a lot more teachers would be leaving the profession earlier in their careers. And it turns out way more teachers have have stayed in the teaching profession, and left upon retirement. So those factors, how that deviates from what you thought are pretty significant contributors to how big the liability is grown and actuarial tables have been updated, you know, public school teachers are among the longest lived demographic groups nationwide. According to the Society of actuaries, and you know that, and that's great. But you know, whenever you've got life expectancies that are pushing 90 that does create strain on the pension fund that probably wasn't anticipated when these plans were first designed years ago. That's good. Thank you. Interesting comment I'll have to think about that some more because my wife is a teacher and I don't know. I didn't anticipate she was going to outlive me by my life expectation but that sounds interesting. Chris, I want to thank you for coming by I suspect very strongly we're going to have you back in the future. In the beginning of each session I try to bring the treasure in to talk about how things are going just to make sure we stay on top of where things are developing and how we're going to get funded. But you put together a really good presentation I think you've given us some foundation talking points to talk about moving forward. So thanks for coming. My pleasure.