 Good morning. You are with the Vermont House Government Operations Committee. Excuse me, a little tickle in my throat this morning, must be the changing of the seasons. So when we last met last week, we had gotten the directive from the speaker that we should move forward with a different structure, move forward with the creation of a task force that can really slow down, take the time, listen to members of the public, listen to the employee groups, and really want to just express that we are listening. We were listening when you said you needed more time to discuss this and analyze the challenges that are before us. And last week we had also seen a presentation from Beth Pierce, the treasurer, and Tom Galanca, the chair of VPIC. They had worked together to put forward some changes to the way the pensions are governed. That proposal was given to us sort of in word form and we needed to share that with Ledge Council to have her draft it in bill form. And so we're going to take a look at what that first draft looks like of a governance change based on what was presented to us last week. And then we're also going to look at the possible makeup of a task force that would be able to bring all parties together around the table to really figure out how we deal with all four buckets and for those following along at home and don't immediately recall what the bucket analogy is. That is we have state employees pension and retiree health care. We have teachers pension and retired teachers health care. So those are the four buckets and those health care buckets, the OPEB buckets really are an opportunity but also a challenge because we have been sort of paying as we go when each year what we need for OPEB or retiree health care, we're paying it as we go. We have gotten a very strong recommendation from the treasurer and others to put that on a path for prefunding, which means that you amass what you think you're going to need going into the future and you start investing that so that part of that retiree health care gets paid for out of the investment proceeds. It's a win-win for the state and for the retirees because it becomes a little bit cheaper for the state because we're getting investment proceeds off of it and it also is better on our books as a state. So that's sort of the snapshot of where we are now and as I said to the committee in an email yesterday, what we're going to look at this morning is just a first pass at setting up a task force and implementing the governance changes that were recommended to us last week and we will continue to work on this off and on throughout the week this week. We won't be able to hear back from VPIC on their thoughts as an official body to the proposal that their chair and the treasurer worked on until Friday because they're meeting middle of the day on Friday and we won't be able to hear from the treasurer either because she's already stacked with a bunch of meetings this week. So we're going to take a look at the draft and then have some committee discussion here this morning and then what I'm hoping is that we can do a little bit more work drilling down into some of the aspects of this draft that I think we can enrich by doing some more investigating and then we'll let folks go do some of that homework later this morning so that we can come back to a couple other bills after the floor today and then it is my hope that anyone who's interested in testifying on the proposal will contact our committee assistant Andrea Hussie and get on our docket for tomorrow and Friday to begin putting some refining touches on this. Any questions so far? I'm sorry I've been rambling I just wanted to make sure that folks who are watching along from the outside are oriented to where we are. Rob, did you want to ask a question? Oh you gotta need you to unmute. I'm sorry I said you read my mind Madam Chair I must have a tell I mean just is is there something on our website about in the bill form? Yes or is that not there is? Yeah I think Andrea was putting it up. Oh okay. It's getting hot off the presses. Because when I hopped on I didn't find it but I'll go back. Go ahead and refresh. I think you'll find it there. Wednesday April 7th. All right it's under Becky Rebecca Wasserman. Okay yeah it wasn't there earlier. Thank you Madam Chair. All right so any other questions from committee members before we go to Becky to walk us through the draft on our page? Excellent. And Rob your tell is just that I can see when you're leaning in to hit the raise hand or the unmute button so not to worry you don't need to try to disguise that. I like to sometimes not wait for people to raise their hand. You can tell when Mark's going to ask a question too because his hand gets right up here. All right good morning Becky. Thank you for being with us and we all have the draft up on our secondary devices. Great. Good morning Becky Wasserman legislative council. I think I had I just want to check with Andrea that this is I had sent another draft this morning at a later date in the morning and I just wanted to make sure that this was this says 5 0 6 p.m. draft 1.1. Okay um I have a different date and a time on mine so I'm going to resend it if that's okay just to um excellent make sure while we're waiting for um while we're waiting for Andrea to get that up on the committee page we can just take a brief break. So who has a crystal ball about how long floor debate will go this afternoon any anybody think we're going to get back to committee today? Rob? Absolutely I predict there'll be 46 minutes and 38 seconds. Oh I'm going to write that down. What's the over under on that? Does Harrison have a pool going on it? You better give odds. So Mike Marwicki I noticed that you've changed your mud season virtual background back to the chamber does that mean mud season is over in your neighborhood? Not quite but we're actually doing good there's a there's a main road that we access our house and then there's a road behind us where there's about five houses and they're still parking their cars at the end of the road walking in. Wow yeah. So different here I was reading the digger I think it was digger article the other day about how bad mud season is but here it's like dry like I can take my white sponge of a dog out and she comes back just as white after our walk is when we started. Overall it's dry there's a fire warning out here and they're not giving any burn permits. Same here especially with the wind that has it's been really windy so that definitely hasn't helped. Andrea has emailed the current draft to the committee and she's working behind the scenes to get the latest draft up on the website so 8.57 a.m. today is the that is a fresh draft that was just a couple minutes before we started committee. So for folks who are following along at home there's a couple of quick workarounds that we do if if the committee assistant isn't able to get things up onto the committee page from from where she's working from her home and so it may take just a few moments for people who are following along to be able to get the draft that is labeled 8.57 a.m. with today's date. So committee members if you are able to access your email you can take a peek at it and we'll go ahead and have Becky start walking us through it. Sure and it was it was just a small change that I made so I can point that out when we get there if it's not up on the web yet. So again Becky Wasserman legislative council this is the committee bill on relating to governance changes to VPIC as well as creating the pension task force. So the bill just to orient you is starting out with making some changes to the VPIC structure in terms of membership and duties of VPIC and because there are some responsibilities sort of scattered throughout the titles not just in the VPIC section you'll see that there I also had to make some changes in some other statutory sections for example in the boards of those of each retirement system to kind of make some changes to how VPIC will be operating and then the last section is the task force section. So starting out section one is amending three VSA chapter 17 which is the chapter that has all the VPIC statutory sections. I'm not sure why but this chapter is entitled Vermont State Police and Motor Vehicle Inspectors Retirement System. So I'm taking this opportunity to rename it the Vermont Pension Investment Committee so that is the first change you'll see there. Section 521 of this chapter are all the definitions that are used in the chapter. So there are some new definitions here. There's a definition for a financial expert and that is meaning an individual with material expertise and experience and institutional fund management or other significant pension or other relevant financial experience. There's subdivision three is a new definition of independent and so that means an individual who does not have a direct or indirect material interest in the plans which is defined in the next subdivision. There's also some language on what independent does not mean so it does not mean somebody who including that person's family members such as spouse, parent, child, sibling, or in-law who has a material direct or indirect economic relationship in the past five years with the retirement systems. Someone who is an employee, director, officer, consultant or owner of more than 5% of a publicly traded entity. Consultant manager or other material role with any entity servicing the plans and then the final definition that's being added is what is meant by plans here so this is referencing the retirement systems for the state employees, the teachers, and the municipal employees. Section 522 is the membership structure for VPIC so it is going from a set seven-member committee to a 10-member committee. The first three members, one member and one alternate are elected by the first is the board of the VSEA sorry the board of the Vermont State Employees Retirement System. The second member and alternate are elected by the board of the state teachers retirement system and the third is the those that are elected by the municipal employees retirement system. So this is not this language is not changing what I've changed in all three of these is language referencing that they may or may not be trustees of the boards of those individual systems and I just took that out as I thought it was sort of redundant because if they may or may not be members then you don't need to specify that so I was just cleaning up the language a little bit there. Then moving on the two members and alternates that are appointed by the governor these members now have to be financial experts and independent so they have to meet those new definitions in section 521. The state treasurer is now a voting member of the committee and then there is the chair in subdivision six that is appointed by all other nine members of the committee and I just struck out voting here because all the other members are now voting members so it wasn't necessary to specify that. The commissioner of finance and management is added to the committee and then the final two new members are one municipal employer who has to have the requirement of being independent that's appointed by the executive director of the elite Vermont League of Cities and Towns and then finally one school employer who also has that independence requirement appointed by the school board's association. In terms of training for the members some members of the committee have to are required now to participate in both onboarding and ongoing periodic training and investment securities and fiduciary responsibilities as directed by the committee. I have struck out the language above referencing that the appointing authorities would consider their expertise and experience because now there is a requirement that they have to have training. There is the next sentence the committee shall provide an annual report to the respective authorities on what training those members have undergone that is not new language I've just moved it from a different section to put it all together in the training and sort of education part of the in subsection b so that it flows a little bit better and easier to find. Any questions on that? I do want to note that oh sure sorry when you go back to the voting members there are now 10 are you saying the chair does not have a vote? Yes so that is specified that the chair this is similar to what is in place right now the chair is not a voting member unless in the case of a tie. Okay and I'll get to that just in a moment but the other nine members who are electing the chair are all voting members. I just wanted to point out in the training section that right now the language says periodic training there is some study language further down about sort of best practices for VPIC and what periodic would mean so I just wanted to point out to the committee that that might be clarified but by a report that would be coming in if this is enacted. So subsection c deals with member terms so except for the chair and for the treasurer and the commissioner of finance and management all the members of the committee serve for staggered four-year terms. If there's a vacancy that will be filled in the same manner of as the original appointment and if a member appointed to fill a vacancy created before the expiration of a term shall not be deemed to have served that term for the purpose of this section. So members are eligible for reappointment but cannot serve more than three terms so the total amount of time that a member can serve is 12 years. There is some transition language for the current members that is in the next section so I will get to how that will work in a moment. In terms of the chair of the committee so this is the exception here the chair can serve not more than 20 years on the committee as either the chair or committee member so that would be a total of 20 years and then there is some language that allows for an interim chair to be elected by the committee if the chair is unable to perform his or her duties if an interim chair is elected then that person would need to be a financial expert or independent. Oh seeing that there's a mistake here that there's a duplicate section on the chair so I'll skip over that and fix that in the next draft. So terms shall end on June 30th with new terms beginning on July 1st and it also says that notwithstanding anything in the the timing of the terms if a member a member can serve their term until their successor is appointed. Subsection D deals with the chair and the vice chair so this is where it specifies that the chair is a non-voting member except in the case of the tie and that the rest of the committee shall elect a vice chair from among its members. There are some eligibility requirements in subsection E so no legislative legislator who's currently serving in the general assembly can serve on the sorry this is a mistake I should say serve on the committee and then in subdivision two all members who are appointed or elected have to be state residents so I just put that for committee discussion there. This was in the proposal from VPIC so I just wanted to put for committee discussion whether you wanted to keep that eligibility requirement. So committee we can we can take a pause for a committee discussion about this right now or we can wait and come back to it. I think the you know there's pros and cons to to to having the requirement that that members of this VPIC be state residents and so I'm happy to have that discussion. Go ahead Peter. Thanks very much Madam Chair and thank you Becky. I wanted to go back to my prior interest on continuity and independence. I'm assuming that the two year terms were part of the previous proposal would they run on the election cycle and I guess that for me raises a couple of issues I can imagine for continuity's sake wanting the terms to be longer than two years and not except by coincidence on the election cycle for both of those reasons continuity and independence. So I think we ought to agree or not agree that two years was okay. I happen to think three would be good because it does stretch out the commitment and it does allow for the election cycle but only every other time and I kind of again I'll address this later but the balance issue between executive branch folks who may or may not come or go with changes in the election cycle. I'm a little leery about that on the same grounds that our consultant last week said you know you really you really want to try and insulate this group from that kind of come and go both turnover and political intervention. Thanks. So let's try to separate let's try to separate from asking a technical question about what the words on the page are to legislative council versus committee discussion on the policy decisions that really should be made you know should be prompted for committee discussion. So on the technical points Becky. So the I think the questions that for discussion are whether you want to require the committee members to all be state residents and in terms of the question that was just asked so right now all of the all of the members are serving a four-year term so that's not it's not two years based on the election cycle. There would be a number of members coming on in July 1st of this year so off the election cycle and they would serve four-year terms. I think there would be maybe two or three others that would then stagger over the next year or two so maybe one of those would be on an election cycle but for a four-year term. And I think that will be a little clearer when it gets to the transition language in the next section. Bob Hooper. Thank you Madam Chair. Becky I heard the explanation from the treasurer as to why the state resident language was in there an example was used as somebody that had moved to Florida that has probably 25 years worth of experience on the committee and people generally nodded their head yet living in Florida maybe you're a little too far but the reality is that people that work at the Veterans Home live in New Hampshire people that live you know work in the other side of the state live in New York the whole airport firefighter department comes from New York for some reason I never understood so this language cuts out effectively from participation in this process hundreds of planned participants and that's based on living here or there one day more or less I find this to be unacceptable from a participation point and I would be a hundred percent in favor of it being eliminated yeah and I think so I don't I think it does cut out possible members on the committee based on their residency the other concern I guess I would have is for the and I don't actually know if this is possible but for the treasurer and the commissioner serving on the on the committee if if it's possible for them to not be state residents I think I'm not sure if that is even possible but it it would be a problem for those members as well to have that requirement if they did not live in the state and and I'm sensitive to the idea that it's an expense if somebody is flying back to the meetings from Florida but I'm not flying down to Montpelier for this meeting and we've done phone contact for years so it's it's a little shaky in a lot of areas thank you Rob Leclerc um thank you madam chair um I find myself in the unique position of agreeing with my friend from Burlington but probably for different reasons one of my primary concerns about this board is to get as much expertise on this as we can possibly get and if it's a matter of my good friend from Burlington being on it or say Warren Buffett I might defer to Warren Buffett um so my concern is that I I don't want to see us limit this to just the only expertise that we could get within the state of Vermont I think it's far too important um to make sure that we get as many talented and committed people on this as we can thank you Sam Lefave thank you madam chair how many people on oh hang on somehow you got remuted while you were in the middle of your sentence how many people sorry how many people that are currently on the board I know there has been a past member who did not live in the state but how many people currently do not live in the state of Vermont I do not know the answer to that Bob Hooper knows the answer to that Bob may not know the complete answer at least two people have recently taken up residence legal residence outside the state but have bob back and forth a good bit um so I'm saying I'll say two at this point both employee representatives any other questions or um committee discussion on this it's flagged for a reason because I think there are probably some really legitimate reasons why um someone with the right skill set might simply happen to live um part of the year or across a state line Rob Leclerc Rob you need to unmute sorry that I'm chair um I did have a question on the independence part but I can wait to go back to that after because I don't want to pull things up okay any other discussion on residency um so Rob do you want to go back to that now or do you want to wait till we've gone through the rest of the draft um whatever works for you madam chair I waited to hold my questions I wasn't sure if you want us to go through and then go back or ask as we're going let's go ahead and have this discussion now okay well it's not a very complicated um I think under the independence there's something about five years that um sorry let me get back up to it here there's a there's a five year time frame here uh so um Becky let's have you review the subsection three there that that defines what independent means and maybe you can help us with some context on where uh you know where this definition came from there um so it's on on page two starting on line one just to orient you um uh so this definition was part of the proposal from vpik um and it is clarifying that independent does not mean that somebody or um the the family members that are listed um who had a material direct or indirect economic relationship in the last five years with the plan um and then there are some examples of what uh economic relationships means here um so that would be an employee director officer consultant owner of more than five percent of a publicly traded entity uh consultant manager or other material role with any entity that services the plan right um I understand most that I'm just trying to understand the relationship in the past five years so does that's not excluding somebody that is currently getting a pension from being on the board or considered independent or excuse me no so they wouldn't be considered independent so say if they had it been six years would they be considered independent in that definition yeah so this definition but the time limit on it is five years so a greater a longer time time limit um I do not read that to uh to sort of trigger them not being independent okay I'm not going to belabor the plan I'm just trying to understand exactly what that's saying so I'll read it some more thank you sorry worries any other questions comments so far bob hooper um thank you madam cherry sorry becky but two things the explanation confused me more and you mentioned this was the vpik proposal and I would like to point out for the members at home this did not come from vpik nor did it come from the chair or the vice chair it came from two individuals I believe that testified to it so indeed does this remove people who are say beneficiaries from serving for five years or um as a as an input well it's not actually talking about beneficiaries of the plan it's talking about economic relationships in terms of the examples that are used are like an employee of of the plan a director officer consultant or someone providing services to the plan so specifically then somebody getting a check from the plan is excluded that is how I read it um but again and and my understanding was that this the proposal came from vpik so I I can't specify who went vpik it came from but it might be helpful for them to explain what they were trying to exclude thank you john gannon thank you madam chair and I apologize that my printer going in the background because I was actually printing out the the vpik proposal or I shouldn't say the vpik tom galaca and beth pierce's proposal I think there's a slight drafting error here and I think the language in the second sentence in subsection three should be you're not independent if you fall into what the rest of that sentence says yeah so it says that independent does not mean an individual so everything that follows means that you are not independent right oh I see what you're saying does it should have it does have a director indirect there is there is an error there yep so what would uh do you want to try to clarify that in what it should say right now in case folks want to chew on the definition of independent or maybe we want to rework the whole sentence to yeah so independent it should say independent does um here let me I'm just going to pull up the language so I don't um the language that I got because I was really just going off of that proposal um John so the definition that was provided to us says independent means an individual that does not have a material direct or indirect interest in the plants an individual is not independent if a is not independent I'm just repeating that if a spouse parent child sibling or in law is a beneficiary of any of the plants an individual is not independent if the individual or the individual spouse parent child sibling or in law has a material director in indirect economic relationship in the past year with the plans including without limitation as an employee director officer consultant owner of more than five percent of an entity if a publicly traded company consultant manager or other material role with any entity servicing the plants for example an actuary a pension advisor entities managing money for the plant so that those if you throw into any of those categories you're not independent and I I didn't hear anything about the five year no it's it's in there so in the past five years so I think where that is so if you were an actuary or you work for an actuary for the plan if you had if it's within the last five years you would not be independent if it was more than five years you would be considered independent very good thank you that helps you thank you John no problem all right are we ready to move forward committee and we can work on clarifying what that means for future drafts okay okay so I think we left off on the bottom of page five subsection f under meetings so the new quorum majority is six members of the committee the if a member is not in attendance the alternate of that member shall be eligible to act as a member of the committee and I I guess I did want to point out here on this point that the proposal did not specify alternates they are still in the draft so I don't know if that's another committee discussion point but I just wanted to point out that this draft is keeping the alternate structure although the proposal did not mention alternates um and then top of page six six concurring votes shall be necessary for a decision of the committee um it looks like there's bob hooper has question thank you again madam chair alternates are important I think for the employee boards because one people are working and don't have control over their own schedule so alternates fill in a lot uh and it's also kind of a seed bed for people to get their feet wet in this um secondly quorum wise and voting wise it sticks in my mind in the original statute excuse me that quorum was not only based on the number in attendance but also the component of the number that were intense so if there were nobody there from the municipal board no action could be taken because they effectively had no input into the vote that looks like it got eliminated is that accurate um I don't actually recall so you're saying that it said if it was referencing the number of um the voting members present well in the current structure with the six people if there's no representation from certain sections of the composition of the body that doesn't matter how many people you have you have to have somebody representing the individual groups there um so that something doesn't happen that they don't have input in um I don't know that we've ever had that problem but yeah I don't I don't recall that being in statute I don't know if that was just a could be a committee policy could be Robb Leclerc um is there any expectation that the alternates would be expected to go through any of the periodic training investments yes there is okay yeah thank you so I the the language does just say members um of the committee I think I can I should clarify that to say members and alternates just to make that clear thank you that's why I asked that question thank you Bob Hooper just to add to that point we had a attorney general's opinion from 2009 I think that if the VPIC structure required anybody could be mandated to have training so that suspect that would still be the rule although what this change does to existing VPIC policy would be an interesting question to hear at some point too thanks um so moving to the top of page six under meetings there's some language that is struck out on lines two through seven relating to administrative support to the committee I just want to point out this was not this is struck out here but it is moved to a different subsection just for sort of clarity and reorganization of this section leave time in subsection G there's no changes here so the public employee members and alternates are granted reasonable leave time to attend committee meetings um subsection H is compensation and reimbursement um so members and alternates who are not public employees shall be entitled to compensation um through the uh for reimbursement for all necessary expenses and the chair uh is compensated um from funds at a level not to exceed one third of the salary of the state treasurer this is all again language that was in there it's just moved from a different portion of this section subsection I is now the administrative and legal support section so I've just consolidated here that the state treasurer provides administrative support to the committee and the attorney general serves as legal counsel um a legal advisor to the committee and again this was all language that was in there but just moved around John Gannon um on the quorum issue um yeah so I just checked the statute um three vsa section 522 um so the language is four members of the and this is the current language four members of the committee shall constitute a quorum if a member is not in attendance the alternate of that member shall be eligible to act as a member of the committee during the absence of that member four concurrent votes shall be necessary for a decision of the committee at any meeting of the committee okay that's current that's current statute yes thank you yeah and I I don't recall anywhere else where it mentioned a requirement of voting members present at the meeting yeah but we may want to adjust the quorum number up I mean so yeah I think we did we isn't it now what's the quorum six six now it's six for uh for a decision but what's six members of the committee shall constitute a quorum yeah uh bob hooper thank you once again madam chair um so john default to your reading uh there is something somewhere though that references that uh we passed over the one third salary point that the treasurer had brought up should maybe be given reconsideration and I know that tom puts in a lot more time than anybody I've seen before so not necessarily linking it to one individual but um worthy of consideration and secondly there have been situations where um quite frankly the pic has not agreed with the opinion of the attorney general is there provision for outside or alternate council has that ever done that has come up I think in discussion a couple of times could there be I guess is maybe the better so the language right now just provides that the ag serves as legal advisor of course you can you can change it I think the committee also does have some under the duties of the committee I think they have some authority to I think perhaps hire yeah contract out um for other services but it doesn't specify legal services so if that's something the committee would like to discuss perhaps you just want to be explicit about that in the statute let's flag that and and then also just recalling that um there's a section in here that that directs be picked to to hire an independent consultant to talk about certain aspects of their reorganization and maybe that's something we want to add to um to their report back in the future on whether they feel they should have a different council uh Rob Leclerc oh thank you ma'am you're right just had a question from the member from Wilmington what he said about the four concurring votes for for the quorum currently I'll give you a minute to get back there what can you read that again John just sure um so you just the concurring sentence for okay I'll start with the beginning of um subsection F four members of the committee shall constitute a quorum if a member is not in attendance the alternate of that member shall be eligible to act as a member of the committee during the absence of that member four concurring votes shall be necessary for a decision of the committee at any meeting of the committee okay that's the question so so that's basically saying that you have to have a unanimous vote if you only have if you only have a quorum before you would have to have a unanimous vote that's correct okay that's all I was looking for clarification on that thank you Bob um so in the context of quorum versus membership are we effectively taking looks like a two-thirds majority to move forward and moving it down to a simple majority if we're going up before there were seven members on the committee um so four out of seven uh with well the chair was a non-voting it was four out of six I guess um and the chair could break a tie so this would be six out of nine and the chair could break a tie okay thank you any other questions before we move on all right go ahead um so I'm just highlighting uh just based on a question I'm highlighting in the draft that the salary of the chair um and the legal advisor as sort of thank you have discussion points yeah um so on page seven section 523 this is the duties of the committee um so if you move to page eight this is where um some changes were made subsection b you'll notice some struck out language um this was language that uh spoke to the compensation for committee members um I just moved that to the previous section because it it didn't really make sense in the the duties portion of this section so I moved that to the membership section in 522 um so now the the powers and duties listed here um so the committee shall set the following actuarial assumptions and that includes the investment rate of return the inflation rate and the smoothing rate method used for the actuarial valuation of assets and returns and then there is a requirement that um not more than 90 days after the end of each fiscal year the committee has to conduct an asset allocation study that reviews the expected return of each fund including a risk analysis using best practices methodologies to estimate potential risks of the fund assets over a 510 and 20 year period and uh the remainder of the statutory amortization period um so the study is submitted to the general assembly the governor's office and then made publicly available on the website uh the treasurer's website within 10 days of being completed um page nine uh there are some the the record keeping requirement um that has stayed the same subsection d is policies so uh again this is the same that the committee had the ability to formulate policies and procedures to carry out its functions um what I've added here is some language which is for discussion um that I'll get to a little later there's some language in the uh state employees retirement board section of the statute that references that the treasurer uh sets by rule standards of conducts for members and employees of the committee for now I've just moved that here and I've highlighted it in those in the board statutory section just for discussion of whether the treasurer should be setting that those rules or um whether it's something that the committee itself should be setting um subsection e is the contracts language so I just I mentioned this at the contracts approved by the committee um maybe executed by the chair or vice chair so um it is possible for the committee to enter into contracts uh subsection f is an asset and liability study um so beginning July 1st of 2022 and then every three years thereafter um based on the most recent actuarial valuations of the plans the committee has to study the assets and liabilities of each plan over a 20-year period that would look at project uh the study shall project the expected path of the key indicators of each plans financial health based on all current actuarial and investment assumptions current contribution and benefit policies and that includes the plans marked market funded ratio actuarial required contributions by source payout ratio and related uh liquidity obligations and then um the study would also project the effect on each plan's financial health that results from deviations from plan assumptions and investment assumptions uh and then possible material deviations from key plan actuarial assumptions including retiree longevity potential benefit increases and inflation bob hooper thank you madam chair uh the last point there is the key one I mean I think we've come to understand that Vermont's experience is somewhat deviant from uh the national trends but we're asking for a lot more reporting here that reporting comes with a dollar sign attached to it are we considering appropriations specifically for that in this package or are we just going to have the fund absorb it significant cost there is no specific appropriation for the additional studies in the bill there are some other uh there are some appropriations in this bill but not specifically for those new duties um thank you madam chair um it's kind of along the same questions as the member from Burlington is it this looks very comprehensive I'm just curious to know maybe you can insuspects um perfect but how much different is this reporting than what we're currently getting being required do you know thank you I I actually don't know the answer to how much more detail this is requiring okay that's fair thank you uh Mike McCarthy I actually should ask this later because we're trying to stick to the the technical questions I'll I'll hold okay Peter Anthony uh thank you madam chair I wanted to uh just back up a little bit too on the reporting language that you're suggesting Becky um you I think you use very general terms like administration and legislature I'm a little uncomfortable with the fact that there's no specificity there um that the report uh should be delivered to the legislature seems to me unreassured and given given the current challenge that several of our members have said we didn't we never knew we never saw it we didn't know about it so I guess flag that for precision uh for for sort of tooling up to be very specific as to where it goes the results of those periodic reports thanks sure and that's correct for the the one study the asset allocation study right now the language just has it going to the general assembly but the committee could of course decide to have that directed to certain committees instead yeah and um you know we we should make sure that we go through all of this with an eye towards how do we want to trigger the legislature to um you know to to cue into some of the uh some of this transparency and reporting um that that we're doing uh in an attempt to make sure that we see trends um before uh before they become humongous problems any other questions all right let's go back to the language uh Rob McClare now has a question go ahead well it's kind of more with stated madam chair to follow up on what you just said that um if if we've got a problem and it's large enough that it's getting to the legislature um that tells me that we don't have the right process in place of the right people involved if it's got to get to that point does that make sense what I'm trying to I think I mean the whole exercise here is just to make sure that we don't end up having these issues grow to the magnitude that they are or wait for the amount of time that's transpired before they get addressed right and I guess my stepping back from the language that's in front of us and just talking aspirationally about what I think should happen I would like to I would like to feel assured that the more frequent valuation studies and the and the transparency that we're putting in here is going to trickle back to the beneficiaries as well because this is their fund this is their money um and we certainly would want them you know we want to create I think processes and systems where um you know teachers and state employees uh have have a better sense a more regular uh view of how their plans are performing um I I agree madam chair thank you so let's flag that and make sure that we feel we have obtained that um before we move this bill out of committee um and there is another section on annual reports that perhaps addresses that so on page 10 subsection g the actual changes to actuarial rate of return current law says that any changes to the actuarial rate of return would be a joint sort of a joint decision between the committee and the appropriate retirement board and this language makes that the sole responsibility of the committee so any changes to the actual actuarial rate of return shall be made by the committee all right annual reports subsection h so beginning january 15th and then every year thereafter so this is specifically submitted to the gov ops committees in the house and the senate um top of page 11 there's a report on the performance of each plan versus its benchmark over three five seven and ten year periods and the funding ratio of each plan to each plan beneficiary at the end of the fiscal year and a report on the status of the funding and investment performance of each plan and any relevant information from the asset liability and scenario testing completed during the prior fiscal year um i wanted to know that there was something in the proposal about the the chair being shall testify to the gov ops committees every year um i chose not to put that in just because i i think it's sort of at the discretion of the committees um to make that decision but of course if there's a way you'd like me to incorporate that i can i can make that change to the language okay let's flag that in the back of our minds folks um bob hooper thank you madam chair um in subsection two there you mentioned funding and investment performance of each plan funding i would assume is the funded ratio and when you call out each plan are you saying stayed in teachers or are you dividing it into information that has been asked for and not received on the individual a cd and f plans that exist now how detailed is that summary expected to be i would like to see it very detailed and this language doesn't necessarily reflect it i kid i i can work on the language if that's a that's a policy decision that we should talk about um because i the way i read this it would be you know state employees and teachers as opposed to group group the group uh see etc and plans are also defined to include the municipal employee system as well yeah and my point on that has been if you don't know where the problem is coming from you don't necessarily know how to solve it yeah uh peter anthony thank you madam chair and thank you Becky i guess to riff off uh bob hooper uh if this is providing a basis for instance uh for another body um to deal with uh reformation whether it's our task force that we're envisioning or some other body it really as bob said the more detailed the better uh so we're not essentially lumping an adjustment that should be made together with adjustments that need to be made depending on the groups we're talking about and so i would err on again this aggregation but thanks again that's partly policy but also again if this is supposed to inform some other body that makes changes i think that other body would be well served with more information thanks rob leclerc um i i can understand where the two former members are going with this my question is is i'm not sure that you can extrapolate this level of detail from something along the slimes because i can see where there's going to be a commingling of investment funds or could be a commingling of expenses but um it clearly would be a good question to get answered but i think you'd have to go to an outside source for that if you could get that level of detail well it also it occurs to me that if we're looking at you know group f group d group c that on any given year there's going to be fluctuations and so i understand the desire for transparency about that but i wonder if we could if if it would be better to put that requirement somewhere else and not and not because it's a snapshot in time and if you had you know in a in a very small group if you had a bunch of people retire uh you know an above average year um that could throw off the the way that looks relative to the other groups within the plan so let's flag that john john gannon thank you madam chair um with respect to investment performance i do believe that we have seen investment performance by plan i do not think you can't divide that into groups um i don't believe that can be done because the assets of a plan are invested as a total um with respect to the funding status i mean we we can look into that i do think it's an important issue to look into um but you know perhaps that's something that should be the role of the task force to identify any differences between the groups um and working on that um rather than putting that information here um but that's my thought thanks all right well let's let's flag that because i've heard this um this desire for information expressed a number of times so let's see if we can um let's see if we can find the right place for that back to the language okay um so i'm going to move on to section two on page uh 11 uh so this is the transition of the member terms um so beginning uh july 1st of this year um members shall be appointed to fill the new seats that um are referenced in section 522 a seven through nine and those that's the commissioner of finance um in management the school employer and the municipal employer those are our new seats that need to be filled uh sorry i see a question go ahead john thank you um i just wanted to note that this transition language is is different than what was in the proposal um because in talking to legislative council and the chair um i found the transition language um in the proposal to be very confusing um so this is an attempt to clarify um what was in that proposal um i don't think any of us understood the exact transition language that was in the proposal so i just wanted to point that out yeah thank you i should have mentioned that as well um so this is this is does deviate from that proposal um so the second point in terms of the the members the current members who are not new seats on the board um so they would serve until the june 30th in the year prior to the expiration of their current terms or june 30th 2023 whichever is earlier um and they can be reappointed if they meet all the eligibility and term limit requirements that are in um section 522 uh so looking at the current terms um there are three members right now who are set to their terms are set to expire june 30th 2022 so those would have those three members um being uh replaced as of june 30th of this year as well so that would be six new members on the board as of um june 30th and then there are two more after that that um are a little more staggered um so those two would be uh replaced in june 30th 2022 and then one in june 30th 2023 um hooper so this is maybe clear but significantly different from what we saw before um i think members were comfortable with serving out their term i'm not sure members are going to be comfortable with shortened terms just to accommodate a cycle and quite frankly i don't see the exemption i actually think that we should have on the table whether or not the employee group can appoint anybody they choose because it's their money their involvement quite frankly under this scheme they're a minority uh at three to seven um and if the governor wants to abide by those restrictions that are in place that's fine but um that's something i'd like to have conversation about so in terms of the first statement um i think there i think that there's a room in here for folks whose terms are expiring to then be reappointed by their respective board so it doesn't um it doesn't necessarily guarantee that there is some wholesale switchover that uh that it could it could simply mean that a retirement board reappoints someone who's currently on the v-pick am i remembering that correctly yeah so this says that current members may be reappointed um they just have to meet the eligibility qualification and term limits so for example they would not be able to be reappointed if they had already served 12 years but that is i believe a current requirement anyway um where currently they serve four staggered terms uh three consecutive years i believe four-year terms three consecutive years um what would i guess limit the reappointment would be the other eligibility requirements in terms of qualification although i would note for the um the state employee retirement board appointees and the teacher's retirement board and municipal retirement board appointees there are no financial expert or independent requirements on those boards for those appointees and it deserves more consideration and i think conversation with the boards and others involved so it's a flag at this point for me thanks Rob Leclerc okay again i find myself agreeing with the member from Burlington but maybe for different reasons that i'm still trying to understand and i'm certainly willing to have somebody educate me on what having these folks perspective brings to this funds overall success as far as the v-pick on the investment side other questions comments committee discussion on that john cannon well rob if you don't mind could you just explain that a little more please absolutely um one of my main focuses around this has been and will continue to be to get as much expertise on these boards on this particular board as we can get and as much as i understand the current structure and totally appreciate people becoming involved and to have the best intentions i'm still want to understand what having them on the board and bring in their perspective to it does for the investment side of this so can i ask you another question rob so when you say are you referring to the members of the plan or or some other group i'm just trying to understand who you're focused on um well i would say the employee and the employer but in particular the employee the plan been the plan beneficiaries um i believe it's the representatives from the other boards um again what does there being a member of this particular committee what does their perspective bring from the investment side of things good does that help yeah yeah now now i understand where you're coming from i just i just want to make sure i understood um what you're suggesting and i'm willing to have somebody explain it to me i'm just asking that question now i think it's a valid question and and and it's sort of the essence of what we're what we're talking about here is what is what is the proper makeup of the committee that's going to make the investment decisions um and how can we uh you know how can we make sure that we have the strongest perspectives on that committee um understanding that best practices are um you know the that appointments to that committee should come through each of the retirement system boards uh so that they have uh influence and uh and direct link to the investment decisions much better said madam chair than myself might um i guess the one last comment i would make is i think it's absolutely imperative and extremely important that they have a presence but i feel it's more on the benefit side but we can have that conversation as well okay hold that thought peter anthony yes madam chair and thank you rob for sharpening that up i i in the original galonka slash pierce proposal notice it was a larger board than there was a subcommittee that was focused virtually exclusively on the investment expertise and investment strategy the way this is crafted and i i favored frankly reducing the size from 15 now to something more like what's on the table but having done that uh the investment focus becomes a committee of the whole and i think it would be uh too bad if the emphasis on the expertise and the investment side took precedence over the skin in the game and the uh if you like accountability with the underlying beneficiaries were lost and and that's why i'm comfortable with the fact that it's a mix between expertise and also connection with the uh community that the fiduciaries are serving namely the beneficiaries so thanks mike McCarthy i think this is this is really fascinating um and to representative anthony and representative leclerce points you know i think this strikes a balance between saying we need to have folks who have you know are going to have the the trust and faith of the the participant boards there uh at the table but that even those folks need to have a certain level of expertise and i think that having that brings they don't give me as a member of the public you know just a a taxpayer and a person representing taxpayers a lot more confidence that there's just the fiduciary responsibility that that the overwhelming guiding principle of the people who are on this new version of vpik will be making the decisions in the interests of the plans mitigating risk uh maximizing performance within those risk tolerances and that it's not about you know setting rates of return that are going to make the projections be rosier than they should be i mean getting back to first principles about why we're doing this is that the vpik in the not too distant past was making decisions about rate of return that were just not realistic you know we missing assumptions and i think that we really need to have folks who have the confidence of the participant organizations there but that even those folks everybody who is on this new vpik needs to have some degree of expertise and financial background um you know the we have we will still have the trustee boards on the plan and benefit side so thanks john gannon thank you um just to to confirm what macarthur just said i mean research extensive research shows that having board members with financial expertise improves investment performance um so his comments are backed up by the research that's out there um so we've gone from having no requirement for any sort of financial expertise to having at least some requirement while still keeping a balance um and having stakeholders on vpik which is also important for a different reason which is to ensure that the decisions made by vpik have some legitimate legitimacy um with the with the state employees and the teachers and the municipal employees so i think we you know there's a good balance struck here thank you how colston uh thank you madam chair um i i think it's important um that that this kind of balance the really or perspective for for what what it can accomplish and i think when you're bringing together folks from different perspectives and experiences and outlooks um their their best poise to deal with problems um problem solving um because we're not coming from a a myoptic perspective of being this expert so i think it's it's a rich blend um that can um bode well for problem solving as this body will certainly have to manage bob hooper bob you need to unmute or peter um i thank you madam chair i probably agree with everything the house said uh and and actually have some facts to back it up but uh to clarify something that mike said the underlying boards have absolutely nothing to do with benefit or plan design that happens right here this is a legislative action those boards don't deal with that at all uh financial expertise yeah it's a great thing but the boston university study also says that a good mixture of employee employer type people adds to the the possibility of moving forward in financial success i don't like the balance that we're proposing now three to seven is is pretty out of whack uh but specifically to what uh how said i mean over the course of my history with this the first decision that i got in on when i became a vsa council member was an employee driven motive to get us out of south south african investment and that came from the employee sectors the people that don't have financial expertise but no vermont and know what social aspects should be the same thing with tobacco same with thing with energy same thing with board composition on the groups that come to ask us to invest money with them linda deladoo who just died always ask how many women how many people of color what's your what's your structure in terms of that stuff there's a responsibility that we have i think is for monitors to make sure that we're not throwing money down a hole that uh goes to places we as a just society don't want it to go for them and that sort of initiative has always come from the employee side thank you so we go back to the draft go ahead becky okay um so i will uh move on to section three um which has some reports specific specifically do an fyi 2023 um so first uh the committee before january 15th of next year has to develop a written policy for implementing both the asset allocation study and the asset and liability studies that are now required by statute and those policies would be publicly available on the committee's website and then um before july 1st of this year the committee would be hiring an independent third party to review and report on the operations of the committee um and the retirement division of the treasurer's office and make recommendations on best practices and necessary actions to make the committee a standalone entity uh the report would be looking at um budgetary authority frequency of training so that i i referenced that earlier about how often committee members should be trained um transfer or hiring of personnel and compensation um and this report would be submitted to the uh house and senate gov ops committees by january 15th of next year and the date for hiring the uh consultant um is early as july 1st but my understanding was that there is already this process is already um sort of started so that date is is perhaps achievable questions comments suggestions on the either the policies in section a or the independent review in section b anything you want to add to that only money again madam chair funding well it was my understanding that the last time vpik met you had a conversation about hiring a consultant and so what was that what was the plan of attack the last time vpik had this conversation it is that but frankly anytime that money is going to come out of the fund to do something that sort of is in respect to a legislative mandate i think we should at least question whether or not taking it out of the fund is appropriate okay well this is in here because it was a direction that the vpik was already heading um so uh it's not exactly a legislative mandate exactly a legislative mandate from that standpoint but i'm happy to have the discussion about that um john gannon yeah i mean yeah you know there's never places where additional reports are required um but you know to the extent that these reports improve vpik um and the performance of our investments that the that that we improve our actual real assumptions especially our assumed rates of return those benefit the plan so if there's a cost to improve those actions then i don't see it as a big issue that they'd be borne by the plan i think the cost is going to be small compared to the potential losses from poor decision making around assumed rates of return or investment performance so i mean i think that has to be taken into consideration too okay uh we'll just flag the um the independent review uh and if there are other aspects of um of reorganization of governance that uh that that we think are important to consider or that members of vpik or the retirement boards think are important we we can certainly consider them as well are we ready to move on all right thanks speccy um section four is so now we're moving to a different statutory section this has to this deals with the retirement board for the state employees association um sorry state employees retirement system um and this is the change here on line 22 is requiring that the actuarial investigation is done um over three year every three years rather than every five years and i've had to make this same change in three different places because it is um in each plan statutory each board statutory section um page 13 section five um i mentioned this earlier i'm just highlighting this for committee discussion uh in the state employees retirement system language there is uh the subsection d and section 472 that talks about conflicts of interest um and um to be honest i wasn't entirely sure what all of this meant so it might be helpful to have uh someone from vpik or the treasurer's office discuss how this is done in practice but it looks like the treasurer is tasked with setting the approval setting the the rule standards of conducts for trustees members and employees of the board and the committee um and there's some examples of what would be prohibited actions on the on the parts of those individuals um so as i mentioned i moved some of this to the vpik uh committees uh requirements under their policies that they would be sending those policies for themselves um for part of this but i i uh did not move all of it because i i wasn't sure what was necessary and and even what some of this language was trying to uh get at so i think this is just perhaps a uh section for further committee discussion bob hooper thank you madam chair i this is i mean i think at the back of our mind when we're talking about this we should always be considering that on the table also is separating this completely from the treasurer's office so uh making some move at independence is a good thing uh there there has been an ongoing when we talk about education uh generally when you go to a uh conference or something somebody will have a a dinner that is sponsored by somebody and we've always been excluded from that because of very very very tight newspaper exposure to kind of rules uh i think the committee has lost out so that's something we also should maybe consider talking about anyway at some point maybe when the treasurer's here okay any other committee discussion um so some of this again is going to be repetitive but section six is making the change from the five year to the three year period for the actuarial investigation um in the teacher's retirement system and then section seven is highlighting that same conflict of interest language in the teacher's section um and then sections eight and nine are the same for the municipal employees retirement system so section eight is the switch to the three year period and section nine is just highlighting that uh conflict of interest language thank you uh rob look there um thank you ma'am this is just kind of a general question does anybody have any idea what these actuarial studies cost the ones that are required every three to five years does anybody have an idea i don't yes as a matter of fact chris roop has an idea oh my goodness thank you madam chair chris roop joint fiscal office uh i i recently uh reached out to the treasurer's office on this very question and uh you know the the most recent experience study uh cost it in the ballpark of about 70 to 75 thousand dollars so um that i i believe that's there there may be a contract update happening at some point in the near future so that amount may change um in the future but that's the the cost of the most recent one was in that ballpark and i can track down in my inbox the exact dollar figure um from the email i got but it was in that ballpark of about 75 thousand close enough thank you amla fave thank you madam chair um can i be reminded of the difference um it would make to have the actuarial study versus the stress test and what those numbers would do because from my experience if you look at things too closely sometimes you don't get a full picture of where they're going while it is good to see if things we had done in the past are uh doing what they're supposed to do but what is with the stress test also look at if we would be setting ourselves up to handle a bad situation and how frequently have we done those so i'm gonna go back to chris i guess at this point and have you um i just remind you that we are citizen legislators and we don't necessarily have an instant definition in our head of stress test and actuarial review and all of that so if there's anything that you can help um sam and the rest of us understand you know what what are these tests and reports that we're looking at so at sort of a very high level there's there's three um three studies at the pensions typically pension systems typically do on a regular basis one is the valuation study they do that every year and uh they you know in the valuation study the that's where they calculate they take a look at back at what's happened in the fund over the last fiscal year they'll recalculate the unfunded liability um you know what is your value of assets what should the aid act be and that informs um the budget so um due to timing issues the f y 20 experience study will inform you know what goes into the f y 22 budget because that study isn't done until about halfway through f y 21 um you know that and they they take sort of a lighter uh examination than the experience studies which currently happen every five years the experiences will take a deeper dive and they'll look at um you know what has been going on since the last experience study um with our workforce participation um what did we think was going to happen um and you know are any changes in the assumptions warranted going forward so um that's where they do the deeper dive and you know I think there is the timing of that I think is a really fair question you probably don't want to do the experience study every year because you don't want short term um trends or short term you know things happening that really really skew your longer term assumptions so you need to you need to find that sweet spot where you're not having your experience and assumptions lag each other too badly but you also want to make sure you're getting you know a complete picture or a more realistic picture of what's happening and then the stress test which I'm a little less familiar about focuses a little bit more on the asset side and and they'll take a look at you know based on where your assets are and what your liabilities and costs are likely to be in the future you know what what will happen in a variety of market scenarios so I remember when I was sitting at the trustee table in Philadelphia they would run when they did our stress test they would run a scenario of what would happen to the fund if we get another great recession and we see a 30 drop in the asset value what does that do to our longer term projection so um you know those are all sort of important studies that look at slightly different angles of the issue and uh you know a lot of these are are likely already done on a regular basis just as a matter of good fund administration but um codifying them in statute certainly couldn't hurt as well does that does that help helps me yeah yes thank you I know we've gone over these like many times but it's hard when it's hard and I appreciate the reminder and um Chris would you know the last time that we had a stress test done I would have to ask the treasurer's office that John sorry yeah Rob Leclerc um what did you call it Chris when you look back over the prior year it's not a stress test what was your term the first one I mentioned the valuation study valuation study thank you um um is the the board that is looking at that valuation study is the only option they have to recommend um the employer contribution for that year I I'm afraid I don't know the answer to that question um you know the the ADEC calculation is arrived at through the valuation study and it's it's really based on a math exercise you know they'll take a look at you know how many retirees do you have how many actives do you have what where are you right now in in terms of your liabilities and you know your unfunded liabilities and your assets and how many years left you have to go on the amortization schedule so um that's kind of the point at which you know people use that sort of mortgage analogy but you know that's the point at which they're recalculating what your balance should be on the mortgage and what your payment should be for the next year so I don't know to what extent the boards can exercise any discretion over that it tends to be a report that's conducted by the actuaries and then you know the ADEC calculation that that results from that um is then you know sent to sent to the legislature and the administration would form the budget process okay thank you John Ganon thank you I just want to return to Samantha's question about stress testing um to my knowledge um our pensions have never been our assets have never been stress tests all right um any other committee discussion on the flagged language here with respect to um the the members of vpik or shall we move on cursor is never where you need it to be um because of the interrelation between vpik and the underlying boards I think we should give some consideration to uh the training of the lower boards and maybe the release time function of that just as a matter of consideration at this point what do you what do you you said release time yeah the members basically we had a section in this language which said uh anybody that works for the state will be afforded reasonable release time for the vpik function there's you know an interplay between that and the lower level state employee municipal and teachers board at this point I think that anybody that does that sort of stuff uh they don't automatically get consideration for education it's kind of a function of whether personnel wants to give it to them uh so if education is important then it should be easily accessible okay um so you're suggesting exploring expanding this governance reorganization to include um mandating time off for people who are serving on the different system boards well effectively I would think that we as would only have access to reach into the state agency of administration I would think that you know that's a gray area for me whether we could tell the principal in some school that they have to release a teacher to go to a training uh but I'm certainly open to that because quite frankly I think what's going to develop is that on this on the board side the people who come to vpik and get elected to these seats and require some kind of prior uh exposure it's going to be a you know a farm team basically so putting people in that capacity that know what they're doing is probably a good thing and if it's helpful I can just read that that language that says uh the statutory language for vpik has um public employee members and alternate shall be granted reasonable leave time by their employees to attend committee meetings and committee-related educational programs and it's but it the point Becky is that it's beyond vpik down into the underlying board yeah so there's no there's no corresponding language for the individual boards okay we will hear from uh the individual boards I'm sure as we um as we move forward with discussing this this week so let's flag that as something that we'd like to ask them about whether they feel they need help in getting the getting the time to uh to do training with their uh their board members John Gannon did you want to say something no I was just gonna point to the language that Becky already pointed to thanks great all right should we keep moving okay um so the last uh section is section 10 which is the task force so we're moving away from the vpik governance changes uh so uh the creation of uh actually for some context um there was a a task similar task force I think the committee has discussed that was um created in 2009 so some of this language is is modeled off of that um although the membership of this task force is is different from that previous commission um so the task force is created to review and report on the design and funding of retirement and retiree health benefit benefit plans and this is just for the state employee's retirement system and the state teacher's retirement system so um the focus of this task force is just those two systems and not the municipal system uh the membership of this task force are three current members of the house not all from the same political party who shall be appointed by the speaker three senate members not all from the same party appointed by the committee on committees the director of the retirement division of the state treasurer's office the commissioner of financial regulation uh the commissioner of human resources there would be two members appointed by the president of the nea uh two members appointed by uh the president of the vsea uh one school board member appointed by the committee on committees and then one member of the business community appointed by the speaker um there are some requirements that the uh the uh house and senate members um in subdivision two a shall not be direct or indirect beneficiaries of either system and subdivision b that the other members uh the uh the employee members would be um would not shall not be currently serving as a legislator or the spouse or partner of an individual currently serving as a legislator so subsection c the powers and duties of the task force it would be making recommendations about plan design benefit provisions and appropriate funding sources along with other recommendations that are um it seems appropriate that have to be consistent with actuarial and government accounting standards as well as demographic and workforce trends and the long-term sustainability of the benefit programs and then there's some more specific uh considerations that they'll be looking at so first is an evaluation of current benefit structures and contribution characteristics in comparison to other public and private systems um next is an estimate of the cost of current and proposed benefit structures on a budgetary pay-as-you-go basis and full actuarial cruel basis um there would be a five-year review of benefit expenditure levels as well as employer and employee contribution levels and growth rates and that would be looked at at a three five and tenure projection of the the levels and rates um benefit uh and funding benchmarks options for providing uh new benefit structures with the objective of adequate benefits within the established cost containment benchmarks uh they would be looking at funding methods um they would also be looking at an evaluation of a shared risk model for employee contributions and cost of living adjustments and subdivision seven is a plan for pre-funding OPEB um and evaluating any possible uses of federal funds to the extent permissible and then finally setting a pension stabilization target number subsection D requires that there's some stakeholder input in this process so um during the course of the the deliberations and before any recommendations are made the task force should solicit input including through public hearings um from the affected stakeholders subsection E lays out the assistance the committee would be getting so administrative technical and legal assistance would come from the state treasurer's office some fiscal assistance from the joint fiscal office and then finally the office of legislative operations would provide committee support services so I just wanted to flag something here for folks because um you know there are in the in the course of our conversations um with folks who uh who are beneficiaries of the pension system um I recall um being very uh very struck by the statement from the judiciary that they very much appreciated that we were inviting them in to talk about uh reform to the pensions because they had never been a part of the conversations before um and so I just want to flag that and also flag the fact that the troopers association isn't it while while their benefit is um is lumped in with the VSEA as a whole they do have their own separate um uh union and uh and so I think it's worth having a conversation about the size of the task force and the ability of the task force to focus on each individual part of this complex pension system um and whether it makes sense for there to be a seat a specific seat at the table for the judiciary and the troopers um or whether we want to do some other sort of um you know specifying that that they need to be involved in this process I mean that this um line 20 here on stakeholder input is really aimed at at at giving a nod to those entities um but I think it's also worth having a conversation about whether um whether the task force should you know include a seat at the table for them so I'm just going to lay that out there as a discussion point for the committee um Peter Anthony Thank you Madam Chair uh and thanks again Becky um this is where my uh urging to to think about the state employees in terms of groups comes up again because obviously the judiciary is a group onto its own as are the VSP and so I just throw out that to the extent to which the list of inquiries that Becky read uh would be um how shall I say would turn up different evidence for different groups it would be equally important to hear from those groups at least if not also have them participate at some level so I agree with you Madam Chair I'm not sure a seat at the table and trying to manage the total size of the task force the task force will have a certain tension to it I understand that but there we are yeah thank you that's that's the rub if you look at the size of the the employee groups who are impacted by the work of the task force you've got teachers you know which is half of the half of the entity but then within the state employee side you've got you know group F which spans the judiciary and state employees um so you know we've got we've got to figure out how to make this uh how to design this task force in a way that um that feels like it's got the right uh ability to function but also the right perspectives at the table if I may a follow on it's uh entirely possible and perhaps productive to have subcommittees uh that essentially focus on particular and unique patterns issues uh circumstances um and that may help manage the overall size of the group and at the same time really put some emphasis on uniquely different subsets if I may I I also noticed that in the list that Becky ticked off I did not notice anybody representing uh what used to be personnel human resources within the executive branch and maybe I missed it in when she was ticking that off but it seems to me we had uh I had several questions I would have liked to ask to that person or that department both informational and policy um and we you know there was sort of a lack of access let me put it that way uh and and and I think in the tax force task force context it would be very important to hear uh about the challenges in retention hiring you know all that rubric um and yet I I repeat I didn't hear Becky actually uh refer to that ingredient in the tax force membership thanks Becky you want to want to point us to that I think we're looking at page 18 yeah I think it's it's item E is the one that representative Anthony is looking for yeah so um the one might the the the commissioner of human resources or designee yeah it's on it's for some reason on my page 17 but um um so peter does that help you with uh with your yep um uh bob hooper thank you madam chair so you I agree with you in general the more the merrier particularly if it's uh impacted employees as opposed to uh Pat basically has said she was never invited quite frankly I don't think she's aware that members of her judicial judiciary branch are included in this now but there's merit to having somebody from the troopers association and a judge participate because they are stand alone even though they're in a a planned structure that's involving more people in some cases um that I I look at the number here and I say it's still pretty heavily slanted towards management and I also go back again to the affected impacted groups the NEA the VSEA uh municipal board if they happen to some point get included should be able to send anybody they want if the speaker can send a representative of sitting in the house not entirely sure why will you tell the one of the unions that they can't if they have that available happy to have a committee discussion about that I think um from my uh from my view of it it's helpful to know that you have people who are representing a viewpoint or an entity as opposed to people who are wearing two hats and if I might one more what is the operational definition in d 8 d of affected stakeholders in the public hearing discussion there is there is no definition so the committee can uh be more explicit um on if if they have a stakeholder groups that they would like to explicitly name in the language you could choose to do this do so so I mean you could extrapolate that every person in the state of Vermont who pays taxes is a stakeholder which is why we're having this conversation right now it seems to be pretty broad thank you it's true and I think it's worth um it's worth just taking a moment to recognize that uh the the legislature um has to write the check at the end of the day and so uh so there should be uh taxpayer involvement or understanding of what we're doing uh john dannon um thank you yeah I just I think there are multiple stakeholder groups that need to be represented um and the public is one of them um they they have a should have a say um in how we manage our pensions because they're they're paying the the bill to some extent so I mean I think that's important and you look at some of the the governance research out there that is one of the the key stakeholders that should be included in decision making um and I do want to follow up bob keeps referring to management um who on this task force bob do you consider management I think bob has been transported out of his chair um so let's let's uh yeah okay so repeat that question because bob was somewhere else who who on the task force is management in your opinion uh anybody that isn't uh an employee beneficiary anybody well that's that's a pretty broad broad question and I have to give a pretty broad answer but um it's it's going to be co-mingled so I would probably back up a little bit then answer that question after consideration that's not answering my question though I mean because you keep raising it so you must have some concept of what your concern is well management in state government anyway management is a designation um and brings with it usually the political perspective of uh the administration that they serve for so um that to me has a tendency to say that there might be uh an agenda beyond simply the fiduciary responsibility to the plan and its members so that's sort of the perspective that I'd like to try to maintain I may be using an imprecise word john but I think that's the sort of directive but I'm trying to get to this you say there's too much management so I see you know management just based on your definition you know it would be the commissioner of financial regulation the commissioner of human resources and you could argue a school board member would also be management at least with respect to teachers could be could could be a could be a teacher that's serving on the school board who knows that's a that's a variability is there another position on this task force that you would consider management I think that in in terms of the way I look at this john it's it's the impacted employee is sort of the person that I'd rather see at the table in proportion to the other side quote unquote whatever you want to call it um and I'm admittedly imprecise in defining that but the more buy-in you have is generally result of the more people who have an affinity to the class that is being affected or impacted so can I just flag that as a as a point of committee discussion that I want us to come back to um but I understand that legislative council has another committee waiting on her so I'm hoping that we can ask Peter to hold unless Peter yours is a specific question about words on the page okay so um Peter we'll come to you next after we let Becky jog us through the rest of the bill so that we can at least understand the words on the page and then we can have committee discussion after great so moving back to page 20 in terms of assistance to the task force um so subdivision two allows for the joint fiscal committee it says it may provide benchmark targets reducing the rate of expenditure growth for retirement and retiree health benefits to the task force and this would help in guiding recommendation so this is um you know it's it's discretionary um it's not mandatory um and then in subdivision three the task force is given the authority to contract contract for some advisory services for benefits expertise and legal expertise and there's an amount of 200 000 in general funds appropriated for this purpose subsection f would have the task force submitting a report by september first of this year and that would go to the governor the gov ops committees um and uh any it would include any findings and recommendations for legislative action and the report would also be provided to the two boards of the state employees and teachers systems so they could comment on it for the general assembly um in terms of meetings um the legislative members of the committee that the house and the senate members would uh choose coat a house and senate co-chair for the committee and those co-chairs would call the first meeting um by july 15th a majority would constitute a quorum and then the task force would cease to exist on june 30th of next year in terms of compensation uh both legislators and members who are not state employees would be compensated um the legislative appropriations would come from uh the legislative budget that the amount appropriated to the general assembly and the uh other members receiving compensation would um payments would be made for monies appropriated to the state treasurer in section 11 is the effective day so it would take effect on passage any questions for becky about the meaning of the words on the page um i think we can have a committee discussion about the policy decisions after we let her go to her next committee meeting all right thank you so much becky for being with us this morning and um we look forward to working with you again on this soon okay great thank you all right uh we had uh a conversation ongoing that i interrupted about uh the balance between management and non-management uh and work and affected employees on the task force so peter is that what your hand was on yeah yes um i i'm not sure john i can improve but for me uh it's a it's a topic of balance that i tried to introduce a couple of times along the way here and it does have to do with skin in the game legitimacy rather than hard uh hierarchical kinds of titles like management employer representative uh i i don't know that that helps the conversation but and it admittedly is squishy and i apologize for that but but i i i don't see uh i don't see uh lifting personnel titles uh and trying to transpose that into something like perspective is is necessarily uh informative um so i go back to do people have faith in the independent judgment of that person or that position john gannon so a couple of things um one there is bob is defined there's only two members of management on this task force and that's the commissioner of financial regulation commissioner of human resources there are four you there are four union members on there so the balance seems to weigh with respect to that in in the direction of union as far as the legislative members go we we indicate in this language that they had to be independent um that's one of the things we're focused on is that they're they're not getting a pension from the state um that they're independent and that was a focus there so that they will be an independent voice with respect to how this task force moves forward and there's six of them that will have no skin in the game and i think and you know we'll represent both parties or all three parties so i'm just trying to get to the concern that there's too much management on this task force because frankly i don't see it michael currency i want to take a step back i i agree generally with representative gannon's perspective but um madam chair you said something that really caught my ear early in this conversation which was you know about us bringing people to the table um with this task force in order to make a recommendation like what is what are we actually asking this task force to do and you know we heard from folks at the public hearings we heard folks in uh testimony here in committee that talked about the need for more work to be done to make sure that any changes to plans any recommendations to how the plans um would would change the promises that we're making employees would still work as a recruitment tool all of those things um that we would have the time and this task force they don't get to make the decision they get to make a recommendation and then that's on us when we return next year to accept their recommendations or make changes you know we need that's us and i think we want to make sure that there's the full span of voices um at the table with the task force but at the in the in the end you know we're convening folks to do that work come up with the best recommendation they can and then give us that to work on robert claire um thank you madam chair um i guess i have a couple questions and a couple concerns about what i'm perceiving the timeline to be here so if i read this correctly we're the the task force isn't going to meet before july 15th of 20 of 2021 is that so we're not anticipating the meeting before then and then we are looking for them to have a report back to the governor and the house and senate committees and government operations by september 1st so basically two months is that am i reading that correctly uh that is what the words on the page say but we can certainly have a discussion about that um speaking as one you know legislator but also talking with a lot of other legislators who uh who are a little bit on overload with the zoom pace of the world i'm not sure that i'm not sure that house and senate members would have much capacity to start participating in this until adjournment but i'm happy to talk about um yeah bumping up that timeline well i i you know i think i said the other day i'd like to have this group get together much sooner than later um in a perfect world i'd like to have some sort of agreement by the end of this fiscal year recognizing that baby optimistic but i would remind this esteemed group here that these pensions were accruing debt to the tune of millions and millions of dollars a month and the longer this continues to go on um the deeper the whole we have to dig ourselves out of and that could potentially mean um a lot more effort on all parties sides involved later on that's that's primarily my concern is this the timeline yeah and i guess i i want to i want to honor what i heard people saying in our public hearings as well and in particular the teachers that i talked to that um that their capacity to engage in this is impacted for on the teacher side by the fact that they're in the middle of a school year so i feel like we've got a we've got a way the urgency with the ability of some of those employee groups to um you know to to to come to the table and start engaging in this um i guess i would say that those that have been involved in contract negotiations that happens during the school year consistently yeah there's a special kind of pressure though during covid with um with what's going on in our schools at this moment but uh anyway that's fair leave it open as a discussion point um sam lafave are you on this are you back to the question of balance sorry i was on this as an um i i too feel that it's something to start sooner than later with the respect i understand that both legislators and teachers are under you know the being on zoom all the time and the pressures that they are under with covid but i just feel that we're not being good stewards of the taxpayers dollars if we know that we are losing that much money a month even if we were to dump the money that we were said that we were going to we're still going to end up with more unfunded liability so to me the sooner we start looking at this um the more appropriate you know i feel that we'd be doing our job thanks um peter anthony thank you madam chair my sense of the plea at the hearings that i heard was in reference to a task force for this summer not the summer of 2021 um and i guess i would also say uh i'm never having lived through a reapportionment session i can't appreciate it but i i just think because that's set back a ways if this task force had something to plunk on the table the second week of january uh in 2021 i dare say we could deal with it or will never deal with it i i'm optimistic that this uh pressure cooker that we have just lived through uh is fresh in everybody's mind they understand uh that time is real money and it's going to squeeze the general fund the longer we wait i would also suggest in in um in response to uh rep mccarthy's observation of what are we actually asking let me just throw on the table just as the last task force force picked a particular glide path and date what we could do is say we want you to recalculate an amortization path uh that is 20 years out from the date the the legislature uh enacts the recommendations and i would say call it 2042 and literally do the recalculation based on that target and uh based on new actuarial assumptions whatever changes the task force recommends that are in fact connected uh and see where we are thanks bob hooper thank you madam chair um i think you know back to john's question what i'm looking at is the fact that there are so few uh actual representatives of particular class and i'll think about that more and get back in our next meeting maybe um i'm also concerned even from the start i wanted to make this conversation a point uh if we throw opib into this which it shouldn't be i continue to maintain because it's not a retirement obligation uh it only makes the water murkier and i'm particularly note that two a on the back of my page 20 which i think might be your page 19 excludes people who are beneficiaries of the system and i would suggest that there's a good possibility that the director of the commissioner or the commissioner uh a couple of them having come up through the ranks fit into that also so i don't really see when you talk about people exercising a fiduciary responsibility where that should weigh too heavily and it's very paternalistic as i said earlier for the uh other limitations on restricting the employees groups from doing what they think is the best for their fund thank you tanya behofsky thank you madam chair i have a couple of pieces and and so my understanding would be that if we were to if we were to invest the money that now that it would gain interest and could potentially actually decrease the liability so we could essentially buy ourselves the couple of months to all you know relax after a covid school year and a covid legislative session and and sort of come back to the table with fresh heads so i think that's certainly something to keep in mind and then going back to the members of the task force the what i mean there i think there's lots of committee conversation here and i'm certainly happy to wait for a more in-depth conversation but i am curious specifically about um the member from the business community and and why why we're thinking they need to be here um that i think was just sort of in recognition that maybe a fresh perspective that the speaker might appoint to this uh task force who's not immersed in um in all of the discussions that we've been having um and could perhaps just be sort of a i don't know a voice for the taxpayer of vermont um i guess the details of how we how we how you define that would you know are certainly up for a conversation here um but you know it sometimes it helps to have just that little bit of fresh perspective somebody who's not already um you know hasn't already sort of determined what they think the right answer is happy to happy to have that as a discussion point uh sam lafave thank you madam chair i don't recall who from the committee suggested it but for the task force um could we consider how much it would cost and who the right person would be to have someone that was not involved at all um and i don't think the business person would be the right person but to help um not moderate the conversation but to make sure that the that the task force is moving how they are supposed to be someone that is neutral completely removed from it um because my feeling is even you know like we are we are doing very well but there's 11 of us and we know we have deadlines to meet um but when you get a group even larger and there will be a lot of emotions um going into that as well that it'd be helpful to have someone that's completely neutral completely out of all of it to help make sure that they are working and uh working forward not that they wouldn't on their own but sometimes it just helps to have a a meeting point of um like get it all out we need to get moving here um it could we possibly look into that or i mean maybe someone even would volunteer for the benefit of the state of Vermont just to be that person who knows um but could we maybe potentially think about that interesting i i'm glad that you brought that up and thank you for reminding me because i think i've heard that idea floated before um the idea of having some sort of a facilitator who uh who can guide um so yeah certainly happy to um happy to look into that and would love to um you know would love to hear people's ideas about you know about the kind of facilitator we might be that we might think would do a good job with that uh mike marwicky thank you madam chair i just wanted to weigh in myself on this idea of defining a quote unquote businessman or business person um i have a good friend who took me to school on that um he he used to teach at Dartmouth and started a business based on his research into photonics which i can't tell you what he does uh but many of our discussions i will rise up and talk about business community this and that he keeps reminding me i'm a business person he says and this is somebody politically who's way to the left of me so i think when we start trying to define what a business person means to be on this uh bernie sanders is a business person he wrote a book he made money on it so uh i'm i'm going to be careful when i say that peter anthony i just uh to refund my good friend marwicky um you could you could invite a member i by the way i agree about the facilitator thing i think that would be very valuable and thank you sam for reminding me of that but on the business uh i i think given the amount of both emotional commitment and cultural uh iconic iconography iconography that we place on small businesses here we ought to just say let v v s b r um send a rep who is a small business person um you know let them participate as a sort of a reality check if you will uh for the task force that would that would confine so to say the eligibility somewhat in terms of indigenousness and perspective i think so i just throw that out as a way to further hone in what does it mean to appoint a business person thanks mic for wiki no you're done bob hooper uh thank you madam chair i i wholly agree with what peter just said i i envision this being an access point for the business roundtable to come in and yet again give us their agenda and uh quite frankly they have an agenda i don't think they're balanced uh i don't notice specifically an actuary being designated uh like in item c three or three and i think it's important that that be available because quite frankly when you start talking about benefit changes uh you don't go anywhere without one of those and i don't think that anybody in the state capital has the ability to do that kind of number running uh and that's just sort of an area that i think we should specifically address as you said one point madam chair they're expensive and two hundred thousand dollars should cover it but who knows um thank you yeah that is what is intended in um in three online 10 of page 20 um contract for advisory services from independent benefits expert and legal expert as necessary so uh happy to hear uh opinions from folks who have a sense of how much it's going to cost to do this work um two hundred thousand was suggested so that is a starting place here um tanya behosky thank you madam chair two things i want to clarify that i'm not saying that it should be a ban on someone who happens to be a business owner from i'm just curious as to why they have an earmarked spot so i just i i'm i own a private practice technically that makes me a business owner i certainly get that so i certainly didn't i want to clarify i'm not saying that anyone who owns a business cannot sit on the committee um but that is you know i think we can have deeper discussion about that the other thing i'm curious about in this bill and i know that i've sort of brought this up a lot is if there has been any additional exploration about including that full spectrum audit that i've talked about to sort of inform the the movement forward um and i'm certainly happy to reach back out to the the treasure or not the treasure the auditor's office if need be but i do want to sort of earmark that as as something for further discussion as we move forward yep um and i think the question that i asked when that idea first came up is do we have us do we have a number of what that costs um from you know from the auditor's perspective if we ask the auditor to contract with somebody to do an evaluation i will reach out to doug to see if he can give us that number that would be super um other observations questions suggestions clarification yes well i i missed i think the the end of the comment on adding a judge or a trooper to the mix did we go past that and i missed it or did we just go past it i flagged that when we went through the membership of the task force and we spoke briefly i think about whether it made sense to designate subcommittees if we wanted to get into that much nuance about how the task force is going to do its work and its consideration so um we can flag that and we can hear what people think over the course of the next few days and committee thank you gannon john john you need we can't hear you another way to possibly address bob's concerns is to identify specifically which stakeholders we need to reach out to um you know right now it just says reach out to stakeholders so we could be more specific there um you know one of the concerns i have is if you start adding too many people to this task force um it'll become very unwieldy especially given the short time frame it has to work in you know if you had 30 members trying to schedule meetings that most of those people could participate in a short period of time i think would be extremely difficult yeah and i would love to find a way to um to direct this task force um that they must uh sit down with certain um certain interested parties and and see if we can get some sort of consensus around that as opposed to expanding the task force too much larger but again we'll we'll continue to hear testimony about that this is really just a first pass of committee identifying areas to come back to how uh thank you madam chair um i i agree um i think the more specificity around who those stakeholders might be it's it's for me pretty similar to when we get into conversations about protective classes between the more specific the better because um we just otherwise may overlook people that need to be at the table good point all right um other committee discussion on the words in front of us all right uh sam lafave um thank you madam chair to me um about like the troopers in the judiciary like those people came to testify to us when we had the uh open when we had the public hearing um and they've written us letters and they've expressed so to me it would be no question that they should be at the table i understand growing bigger you have more you have more problems but if we're if they are being affected then they should be at the table if that's what this task force is set to do and i understand that we're looking at it i apologize i understand that we're looking at it you know how to represent them best but if we are affecting them we are doing the task force then they should be at the table because i thought that was the whole reasoning behind having this task force yeah no you're absolutely right and i guess you know my thought is um you know if the task force is focused on something with respect to the to the teacher's plan um is it you know is that something that we need to have each of the you know each of the state employees side whether it's troopers or judiciary or vsea folks involved in that and and you know if they want to if they want to commit the time to it and and we want to expand the task force we can certainly do that but um just trying to be respectful of uh people's time as well isn't this more than just the teacher's plan oh wait i must hear you no no okay it is it is it is both teachers and state employees and i i'm just suggesting that since a big focus is going to need to be on half of the problem with half of the problem being the teacher's retirement system um you know do all those folks want to uh want to stay and participate in that half of it so other questions comments suggestions before we wrap okay so um committee what i would like to do since we have um a little more time this morning um what i'd like to do is ask folks to uh to take the rest of the morning um and and into your lunch hour if you want to and dig into some of the issues that you uh that you may have raised as we were having committee discussion here um and bring back you know resources bring back sample reports bring back a model for how uh you know how this is done in other states um uh if you have some thoughts on you know on the type of facilitation that we might like um to suggest uh you know certainly do some research on that as well um and we will take the rest of the morning um to work independently or grab a a colleague on the committee and um and work on a project together and we are scheduled to come back to committee after the floor this afternoon and i hope that Rob Leclerc has an accurate crystal ball and that we're not going to be on the floor for i don't know was it four hours yesterday six hours i don't know it it felt really long um it is what it is uh sam lafave um thank you madam chair me i just throw a idea out that if hearing what you said so like so we we understand that there's the state employees and the teachers and we understand that the put the legislate put the legislatures that would be on their side because i feel like we do have a responsibility and people might just need to you know only be considered to be appointed if they feel like they're not overloaded um that's a responsibility between you know between them and the speaker but could the state employees task force have like a mini breakout and they start working and then the teachers when they feel that they are done for the year they can start working and then everybody comes together because you know what would a state trooper uh you know i did not not that they wouldn't know but like you know they they care about their side and the teachers care about their side but we know we need to get to a bigger idea so even just get the ball rolling to maybe even weed out some of the things we're like hey like we tried this it doesn't really work so we're going to move on from that but just to get them working earlier than july um because i know that was one of uh rupler claire's biggest concerns is you know and mine too like if if i would have had people already like i would have friday night i would have started working uh just just to have people get going um to me it is important so could that people just maybe ponder think about that you know get one side moving and at the end you know everybody needs to sit at the table everybody needs to be comfortable um with this but maybe just get the state side going until the teachers uh have their deserved break from school and then move move into working on their end and then again follow the deadlines um that we have in place but potentially we could get some help uh started earlier so um yeah that sounds a little bit like the subcommittee model that um that maybe peter said earlier i can't remember who said that um you know the idea that that working working in focused groups might be beneficial so um let's flag that as an idea um and we will certainly put ideas and other perspectives um on the table as people come and ask to testify in committee all right so um have a productive rest of your morning um maybe you'll find some reading material that you can continue browsing during floor debate i'm not sure um but uh i believe that that is all we need to cover for this morning so thank you for your focus and attention you