 We're going to switch now to the retirement pension issue, and we're going to have Representative Copa and Hansen just kind of lay the groundwork for us here. But before we go there, I just want to say that, so people understand, we are, we know the bill hasn't yet passed out of the house, but we are trying to get a head start on it. So we are dealing with the bill as it came out of house government operations. That's what we're looking at now. We started a walkthrough yesterday with Becky Wasserman, got through most of the section on the governance, have not yet had a walkthrough on the task force. She will come back to us this afternoon and walk us through that. We are going to only, those are the two issues that we're going to deal with. We're not going to, and I don't mean to sound unsympathetic here, but we're not going to hear about how pension cuts will affect teachers or state employees because we're not going, that isn't in this bill is making cuts or changing the benefit structure at all. So what we're taking testimony on is the governance changes that have been suggested to us and the task force to look at the benefits. So that's what we're, that's what we're dealing with only those two issues. So not to cut off people, but we're getting a lot of, all of us are getting a lot of emails from different people about how they had planned their retirement and now they're not going to be able to do that because we're making changes, but at this point we're not making changes. So we're not going to entertain those. We'll still hear from people and we'll still respond to them, but we're not going to take testimony on those, on any specific changes. Does that make sense everybody? Does anybody have any questions about that or, and as the bill then passes out of the house, we'll then take a look at any changes that might come through house and floor amendments. Okay. Hopefully that makes sense to everybody. Yep. Complete. Okay, great. So with that, well, I'm going to turn it over to Representative Copeland Hansis for kind of a big picture overview and then we'll hear from Representative Gannon about a little more detail, but remember we haven't had a walk through the bill yet. So too much detail might befuddle us. So just as a reminder, and then we'll open it up to just kind of some general comments. And then our plan is on Tuesday to look, all day Tuesday we'll schedule to look at the governance section. That will be on Tuesday. And then on Wednesday, all day we'll look at the task force because it is going to be much more, much more efficient if we look at them separately so that we don't get testimony that wanders between the two. Does that again make sense to people? That we will do it that way. So Tuesday and Wednesday, you can plan on Tuesday for governance, Wednesday for the benefits task force. Okay. All right, unless anybody has any questions for me or comments or wants to shut off my internet, I'm gonna turn it over to Representative Copeland Hansis. Right, and thank you for giving us a few minutes today to talk about the work that we've been doing. I know that you can appreciate the intensity of this topic. And I think the way you're organizing yourself will hopefully allow you to focus your conversation. It sounds like a very good plan. You know, I don't think I'm telling you senators anything that you don't know, but the reason why we're here having this conversation this year is because of the ballooning ADEC payment, the state's obligation to cover the unfunded liability within the pension system. And to understand the urgency of the moment, you only have to look at the rise in ADEC payment over the last two fiscal years. We are looking at an ADEC payment, funding an ADEC payment this year of $315 million, which I believe is around 13% of the general fund. And that 315 is 96 million higher than it was in the last fiscal year. And at that rate of growth, you can imagine how it will consume state spending. It is consuming state spending. And so, you know, the ADEC payment is, as I said, the state's obligation. And so what we wanted to do as we were beginning our work on this is really understand what factors contribute to the size of that unfunded liability that leads to that level of payment. And it was important to me at least to understand the contribution of sort of sins of the past, you know, short funding that was done in the past to the different systems. Because I think that it's important for us to stand by our word. And if in underfunding in the past, we're creating a whole now, then we need to understand how much of the whole belongs to us as a legislature, even though it might have been before Senator Rahm was born that these things were, these mistakes were made. But at any rate, we spend a great deal of time, you know, understanding the different things that contribute to where we are. And so that's what has led us to suggesting that this bill should include governance changes because part of the challenge that we've observed over the last few years, over the last decade is that our projections of what we thought we would get for investment income have fallen short of projections and our assumptions on the demographic end. So, you know, how many people are gonna retire this year? What will their final average final compensation be? How long will they live in retirement? Those assumptions have also been off to the detriment of the retirement system. And so that really begged a conversation around what can we do to beef up the governance structure of our pension system so that hopefully those predictions and projections are more accurate, more real in the future. But most importantly, that that information gets communicated to the beneficiaries of the system. You probably all know that we had two public hearings, four and a half hours hearing from workers and citizens in the state of Vermont. And it was stunning to me the extent to which there is misinformation out there about how the pension system is invested and how those pension funds are governed. Because a lot of those folks coming in to talk to us were pointing their fingers directly at the legislature and saying you mismanaged our money. And so, you know, the story that we're trying to get out there now and that we're going to ask the newly constituted VPIC to do in the future is we are the VPIC needs to communicate with the beneficiaries of the system so that they understand how the fund is performing. We need greater transparency and we need the beneficiaries to understand who the entity is and how they elect people to sit at that commission level to make those decisions. So you'll see the language around modernizing the VPIC is a proposal that came to us from the chair of VPIC and the treasurer who worked together to propose these changes. And we have tried to the greatest extent possible to listen to the feedback that they've given us about how they believe moving towards a more independent pension investment commission will allow them to strengthen their performance in managing the funds. And so that's what you'll see or you've already seen. You've already gone through that part of the bill. We have gone through that part of the bill. Okay, great. So I don't need to talk about it. We'll move it up to page 14. Well, yeah. I mean, we went through most of the governance structure. Yeah, so you'll see independence, you'll see transparency, you'll see reporting and more frequent testing of how we're doing on our assumptions. So then the other half of the challenge is yes, we can reinvigorate or strengthen the VPIC system and that will theoretically improve our investment returns over time. But then we have to ask the question of are the benefits that we are paying being covered by the contributions that are coming into the system plus the investments that we're making? And that's a pretty important question to understand and one that this task force is gonna be focused on because the reality is that people are living much longer than they did when these pension systems first came into being. And I think it's worth asking the legitimate question and taking the time to do that math exercise. Is this benefit matching the contributions that are going into the system or are we going to perpetually set ourselves up for a challenge to figure out how to fund these over time? So in setting up the task force, we wanted to make sure that the task force had legislators on it because as you all know, when and if a change in pension benefits is decided upon, it's gonna have to come back to the legislature. So we needed legislators to be able to be a part of this, to be familiar with it, to understand it. And also honestly, to be holding that space to say, we can't afford 13% of the general funds to be obliged to go into the pension fund every year. I mean, that's almost twice the size of our entire Department of Corrections. And so we've got three House and three Senate members projected to be on this task force. If I can just point out, we haven't gone through this task force. We haven't gone through this yet. So I would ask that you not go into too much detail on this until we have a chance to actually go through but just do a pretty high level breakdown of it because we haven't yet had a chance to hear Becky do the walkthrough and ask her just technical questions about the bill. If that makes sense, I don't wanna get into detail that we haven't yet been able to. And just I should have pointed out before that we've all done the retirement pension 101 with, is his name Chris Rup? Yeah, so we've done that. So we do have an understanding of the system. So sorry to interrupt you. So I'll just go really quickly then, big picture and then you can ask questions if you'd like. You know, the task force made up of legislators, union representatives and two administration members and the director of retirement from the treasurer's office. And we felt that it was important also to designate that they need to take stakeholder input from a few other entities, in particular employees from the department of corrections because they are in a unique situation where they're doing a very difficult physically demanding and stressful job that is not unlike our law enforcement folk, but they are in the standard retirement system that envisions them working well beyond when law enforcement works. So we would like the task force to sit down with folks from the department of corrections. And likewise, we need the task force to also sit down with folks from the judiciary because there's a different retirement benefit for judges and we believe it's worth taking a look at that. The task force has some direct targets that you will hear from legislative council on. We felt it was important for the task force to have some specific tasks that they were focused on in order to not spend any time spinning its wheels trying to design what they're solving for. It was important to us that the director of retirement be at the table with the task force because that is the person who understands how all of the benefits work right now currently within both the teacher system and the state employee system. And that kind of expertise at the table is gonna be critically important to help the task force unwind and figure out how to move forward. So we had a lot of back and forth about the timeline of when the task force should complete its work. And there were a lot of voices around our committee table who were saying, this is a huge problem. We need to figure it out right away. We also recognize that this has been a very difficult and stressful pandemic year. And that for our educator workforce in particular, that stress doesn't alleviate until this school year is done. And so we are not starting the task force immediately in deference to the fact that the teacher workforce is gonna have trouble engaging on this until mid June. But we did feel that we needed to have a report deadline at the end of the summer months. And so September 1st is what we landed on for a due date. So that's roughly 12 weeks with the ability for the task force to meet up to 15 times. So if they have a couple of subcommittees that need to meet, they will have the ability to do that. Any questions for Sarah? Very high level questions. I don't want, at this point, I think that we don't wanna get into the detail because Becky is going to join us this afternoon and walk us through the rest of it. And I'd like just to make sure that our committee hears the walkthrough in a, so that we can form our own perspectives and our look at the details that we're concerned with. And with full respect to the house, what the house, the work that the house did, I think that it's important that we be able to look at it kind of anew given the kind of high level that you've just given us. Does that make sense? So any questions, Senator Rom? Well, I just feel like we should, you know, ask a question while we have our chair here who's been through a lot on this bill. Representative Koblenhansis, you and I were both here about a decade ago, the last time that we had to have a major negotiation like this. What do you hope will be different this time from the work that we're starting to roll out than it was last time? Because we know that we, you know, in some ways failed to solve the problem then. So what do you hope this process does differently? So I would, I appreciate the question. And I think the answer to that falls into two categories. One is that I believe that the improvements that are being made to the investment commission, including independence, transparency and reporting are going to help on that side. But with particular respect to this task force, Representative Gannon and I spent a lot of time reviewing what the makeup of the 10 years ago task force looked like. And we wanted this process to be more collaborative with the folks from the unions being able to come to the table with legislators and with administration folks so that we can all be at the table making the decision together. This is a challenge that impacts, you know, Governor Scott's administration as well as the legislature, as well as our unions. And so we wanted to make sure that there were, that there were voices from all of those perspectives. Any other questions for Representative Culp and Hanses? Yes, Senator Clarkson, you're muted. Thank you so much for the work that you guys have undertaken. We appreciate you teaming it up for us. So well, and I'm just curious given that we're probably not going to have time to do a public hearing. How many people did you actually hear from in those two hearings? So the first hearing was two hours long. I think we heard from 32 or 35 people. The second hearing, we extended a bit longer to two and a half hours. So I think we had 45 or maybe 50 people. 49 maybe. In addition to that, when folks registered for the public hearing, they also were able to find the email address to submit testimony. And so we, on our committee page, you'll see volumes and volumes of written testimony that was submitted by both by people who came to the public hearing, but also from people who weren't able to attend. Great, thank you. And I think the difference now is that most from what I understand, most of the people who were coming to the public hearing were concerned with the proposed benefit restructuring, not talking about governance or the task force. They were concerned with the proposals to change the benefit structure. Right. Absolutely, and my guess is that's big. And we're now, of course, getting all the input from all our constituents on these issues. Right. They're now more focused on those two issues. So anybody else have any questions for? And I thank you a whole lot. I, and I know that it's been tough. This is, and it's an issue that we need to be serious about and we need to have empathy and we need to really make sure we're doing the right thing. And it's particularly hard to do that in our virtual settings, or I guess that's what they're called. Anyway, the way we have to do this is very unsatisfactory in terms of having real conversations. So I acknowledge the work that you've done and under really difficult circumstances. And that's true of all the legislation we're doing this year, but this has such an impact on so many people and those people who we support our teachers and our state employees. Exactly. Yeah. Yeah, true for itself. I will just make a comment about our state employees and this is not saying anything about a negative comment about teachers, but we confirmed today some governors appointees and two of them, Beth Festigy, commissioner of human resources and Suzanne Young, secretary of administration, both in their hearings with us around their confirmations spent a lot of time talking about how they were so impressed by and supportive of the effort that our state employees put in around the pandemic and dealing with that and putting themselves out there in front and really being responsible. So I just wanted to pass that on because that was really good to hear from them. Okay, so are you guys on the floor right now? No, we are done for the day. So I'm gonna hang out here with you, find people and... You're done for the day? Yes, they were done for the women's caucus to meet actually. But they went out at like nine o'clock yesterday. We got an eight and a half hour Zoom floor yesterday with multiple, multiple roll calls. With more bottled up, I understand. Okay, well, so I am going to just... Becky will, I apologize. Becky will be joining us. I'm not sure at what time. Gail, did she say what time? Yeah, she'll be here at 3 p.m. Okay, so I guess before we go there, then I would just like to have kind of some general comments from people knowing that we're gonna go into great detail on the governance on Tuesday and the task force on Wednesday. But to just have some general comments and if we have questions, ongoing questions for the chairs, Copland-Hanses and Representative Gannon will just try and do a kind of a conversation. So with that, I think I'll go first to Mr. Galanca. And I do apologize here because you're not someone who's usually in our committee and the rest of these people we see all the time. So I didn't bother introducing ourselves, but we will do that now because we don't normally see you. I'm Jeanette White from Wyndham County. Thank you, Madam Chair. Hi, I'm Anthony Polina West, County. Hi Senator. Can I have a call of Moore Rutland County? Allison Clarkson, Windsor County District. Keisha Rom-Chittenden County. Nice to meet you all. Thank you for having me. Yep, nice to have you. Thanks for being here. So I can, what would you like me to, I can tell you a little bit about myself and how I got to VPIC and I'm the current VPIC Chair. Yeah, what, and just your general support or non-support for the where we are and just general comments. And then I know that you have a particular interest in the governance part of it. So... Yeah, no one else does, but I have a strong interest in governance. But I will start by saying, I think the House GovOps Committee has done a tremendous job working with all interested parties, including the Treasurer and myself in trying to craft a law or a bill that incorporates a lot of the ideas that we've been trying to foster or develop just in-house over the past four or five years. I came to VPIC as a municipal alternate appointee. That was a while ago, but it was through my affiliation as a city council member in Montpelier. And so I was, I come from the municipal side really. And so I was active in the benefits and working on the underlying pension board for the municipal system. From that, I was appointed to VPIC as an alternate. I became their voting member in 2015 and then the members voted me as chair in 2016. So I've been chair of VPIC since 2016. Since that time, we've really gone through a major reorganization of the VPIC structure, as well as our focus in regards to investments. And we've really taken the approach of simplification, lowering fees, bringing in expertise and actually owning the investment process that we have here in the state of Vermont. So I think it's translated, although the performance numbers of the past have been relatively poor, I think you'll be pleased to see that we've increased those numbers significantly since 2016. In fact, back in 2016, when we took over, I think we're in the 95th percentile of our peer groups in terms of performance. As of December 31st, we were in the top 18% of our peer groups and that's based on a five-year number. So it's not really just a short-term number. It's really a more, and it's really a credit to Beth. It's a credit to the treasurer staff and it's a credit to VPIC and the ability for us to actually make the changes that we've done over the past number of years. I think what this legislation allows us to do is really get to the next step. It really takes us, I think, to the next level and ensures the protection of VPIC from future political influences that may affect the treasurer's office. That's great with us right now, but I think the structure in place right now could stand tightening up and I think that's what this legislation does. I took to this process really four things that I wanted to see come out of it and we talked about this at the VPIC level. We wanted to move towards independence. We wanted to increase transparency. We wanted to increase accountability because we want people to know what we're doing and we also wanted to maintain continuity of the progress and changes that we've made over the past couple of years and I think this bill accomplishes all of that and I do want to thank Representative Copenhanzis and Representative Gannon for really integrating us into the process and taking our advice, even though it was some of the things that were against the original bill, I think it really, I think make the bill so much better by integrating some of the existing practices that we do. So I'm happy to answer any questions on VPIC or the performance or this bill, but I strongly support it and Beth and I have been integral in its creation so we're happy with the results. Thank you committee. I'm gonna make a suggestion here for the committee members that in order to expedite the kind of questions and answers that we might have from people as they come to us to talk about either the governance or the task force, that as when Becky walks us through the rest of it, we will definitely have some questions. I've highlighted a bunch of places where I have questions. I either need more understanding about this or why did we do it this way? That if you would send those questions to me, I will make sure they get on, put on our committee page for Tuesday so that when Mr. Galanca and Steve Howard and Jeff Fan and then Michael Neal talk to us, they have, and the treasure and all the other people who are gonna talk to us, they have those questions in mind that those are things that we've already highlighted as concerns. Does that make sense committee? I mean, we'll still have time for questions and answers, but if we can give them some heads up for what some of the questions and concerns might be ahead of time, I think it would expedite it and it would help them to know where to focus. Does that make sense? Yes, I think that makes some sense as long as we reserve space for inspired new. Oh, I'm not saying that that would be the end of it. I'm just saying that if we all have a, well, that's all I'm not saying we're not gonna have questions and answers, but it will give them a heads up to what questions we've already unearthed. Okay, Senator Rom. I think I understand that this kind of the, going from the previous governance structure to the new one is something we went over with Becky. So I didn't know if I could ask Tom a question related to that, just as somebody who was in the past is in the current governance model. You want to ask him right now? I'll be happy to, yeah. Okay, okay. It just struck me, I was kind of fixated on it. So it could be immaterial, but it looked like certain people were compensated for their role. And it sounds like a very big responsibility. And other people, if they were public employees were not compensated. And I just wondered, it felt like a big difference between who is a public employee? Who's salaried? Who makes a lot of money and who might participate? Who doesn't make as much money? Would you say that in your role, it feels like you receive compensation that's adequate for the work that you do on that? Over the past two weeks, I don't know if I'd say that, but you know, I left that to VPIC to decide. It's in statute that they could pay me and they've elected to pay me. I'm the only paid board member or member of the VPIC board. VPIC does have three paid staff. So I don't know if that you're aware of that. We have a chief, a number of years ago, we used to have a director of investments and we expanded that role to get a chief investment officer. So we brought in a former chief executive of office, chief investment officer who ran a large endowment fund. He ran the Hershey Trust. And so we brought him into the state of Vermont. We were lucky to be able to bring him in. And he's helped us tremendously in regards to bringing a more in-state focus from our investment staff. We also have two other employees that work in the treasurer's office that are strictly dealing with investments. And they're terrific. But we run this on a three-person shop basically. I know Treasurer Pierce has always said she's asked for one employee per billion. Well, we're up to five. So five to five and a half billion, but we only have it on three. So maybe that's why she wants us to go independent. She doesn't want to deal with us anymore. But I think the internal staff is the key to this independence is to figuring out how we run this. They're the only compensated members of the treasurer staff. I guess my question was kind of, do you feel like there's reasonable offer of compensation for people to participate as commission members given? Well, that's an interesting question. Should commission members be paid? I personally think they should, at least at a more level than a de minimis daily rate. At what level? I'm not really sure. We plan on having a compensation study over this upcoming next couple of months where we've already commissioned that. And that's part of the bill that we'll have that done by January. It's an interesting question. Because you do have difficulty getting people volunteering, particularly as you expand the board, getting people to commit to, it used to be when I first started with VPIC, the meetings were a day or two full days. We've limited that. So they're much more efficient. And the agenda, we usually have half a day meeting every month and then we meet as needed. But I do believe that that's an interesting question that should be explored in this committee review. But we don't, I don't know. I personally say yes, we should pay them more, but I'll wait till we hear the report and make a final decision. And while we have you have one more question. I think there's been some spirited debate about how well our returns are doing, how well our funds are doing in terms of the returns we're getting. And I think the last thing I saw was Treasurer Pierce saying, we're doing well for a small state of some size. Like it was, it seemed like, yes, that's probably true, but how would you characterize the ways in which you all have tried to measure performance, boost performance, look at what other states are doing, look at like pooling or anything regional, like how would you characterize the success of the returns? Well, we compare ourselves against funds that are a billion to 10 billion. So we're right in that middle of that range. And I think we compare, I'll check the latest number. I have it on my other screen. It doesn't say how many are in that benchmark, but it's a significant number. We utilize RVK as our investment consultant and they're a national, one of the top five national firms for investment consulting work. So we compliment our staff with our work with our investment managers or our investment consultant. And this is the benchmark that they've set for us. We haven't tried to change that. We've tried to keep it as neutral as possible so it can be comparable over time. But if you wanna know the real performance, I can send you the most recent report. I think it's up on the house page through February. Our five year number was up 10.36%. Our 10 year number was up 7.07%. So yes, it's somewhat time endpoint sensitive. So it's hard to really, you look at last June in the middle of the COVID crisis where markets were down, it looked worse. And that's where we lock in the data value for the actual error report. So it really is endpoint sensitive when you look at that number. So you can cherry pick different dates and say either they're better or worse. I like to look at key dates, whether it's fiscal year end or whether it's December 31st. And then you can have a good comparison against your peer group. But I'd say we're doing a lot better than we were. We were, when I first stepped into this, we were relatively poor versus our peers. And I don't wanna blame that on old VPIC. I just don't think they had the resources in place. I don't think they had the structure in place. They were taking advice, a lot more Wall Street firms and we had a lot of complicated investments that charged us a lot of money. And those were all drags on investment return before 2016. We've ended up lowering our investment fees by about 37% if you go on a basis point basis. And so we originally back in 2016 were paying about 63 basis points. And a basis point is a fraction of 1%. So right now we're down to about 41 basis points. So we've really made a concerted effort to index where possible. But when we do not index, when we go to active managers, we need to own them and justify why we owning them, why we own them. And I'll say one of our probably more expensive investments is actually a local firm up in Burlington that has done the best versus their peer group. And we probably pay a little bit more for them than our index products. But that keeps money here in Vermont and we've utilized the money in that way. But I'm proud of what we've been able to accomplish over the past six years. And I don't wanna, I know we need to look at the old performance data, but I think this will help us continue the positive trends we've made over the past couple of years. Thanks. And just so that you know, I'm hoping that you will be with us again on Monday when we go into depth on the proposed governance structure. Monday or Tuesday, I'll be happy to. Sorry, Tuesday. That's the beginning of our week. So yeah, Tuesday. Yeah, I'll be available Tuesday. Sorry about that. So unless there are more questions right now for Mr. Galanca. Oh, yes. I don't wanna take us off on a tangent, but if you could just speak briefly to the benefits of independence. And I wonder whether around the country. I'd rather wait until we can talk about that on Monday when we can go into detail on the proposal because that we're gonna spend all of Tuesday talking about the proposed governance structure. So we'll be going into detail with Mr. Galanca and the treasure and all the others concerned about the benefit of or non-benefit of independence. Is that okay? Sure. Okay. Thanks. So I would like now, I think to jump to Steve Howard if you would like to have some comments. And again, remember, we're not talking about benefit structure. So take it away. Thank you, Madam Chair. And I'll just try to keep it very general. And I trust you'll correct me if I start to get in a little into the weeds too far. I certainly will. Thank you. Thank you for the opportunity to testify for the record of Steve Howard and the executive director of the Vermont State Employees Association. For the state employees, this discussion is really one about fairness, balance and equity. And both for the governance changes in for the pension task force, that is an overriding principle. I think if we've learned anything in this process is that the process really matters. And unions are used to a process where the workers are seated at a table with the management and they have equal power. They are full participants in the process. And we've been able in that time, during that collective bargaining process to come to agreement with the administration, with administrations of both political parties over contentious issues, big contentious issues. So the process really does matter. And so for the, as we look particularly at the pension task force, the overriding issue is whether we're going to have an equal seat at the table. What we ask for in the house and what we'll ask for in the Senate and potentially on the floor of the house next week is that there'd be the same number of labor seats as non-labor seats. And that is very important because our members want to help solve this problem. They wanna participate in a positive way, but they don't wanna be subjected to a process where they think the cake is already baked, where they think it's just a process that is being set up because it had to be set up in order to get to a final outcome that was already predetermined. That's not what we're used to in collective bargaining. It's certainly not even in the legislature what you're used to when you have a conference committee. You can imagine if there was a conference committee on a bill and the house got four members and you've got two. It just is a very important part of this discussion and our members are ready to have this discussion but they don't wanna be part of a political process that looks to them at this point like just a political operation that's been set up to get somewhere where the leadership wants to go. We think there has to be a give and take and equal power and balance in order for the process to have credibility. So that next fall or next January, potentially we have an agreement that we can all work together to implement rather than being at crosshairs or in conflict because we felt like something was done to us unfairly. So I would just leave that with you. We also think it's very important that it be tripartizan that we not make this something that is controlled by one party or another but that it be tripartizan that we include all three major parties that Vermonters have sent to the legislature. It's really important to our members that that be part of the process. The other, I think important part that is consistent with the membership of the task force is that the task force not have prescriptive language in it that says what the outcome should be or what the goal should be. That the goal be left up to the task force to decide. Right now, the buildings in the house that will be coming over to you says very specifically exactly what they have to do. And that seems like not a good idea from our members perspective. That's not really allowing them the freedom to use their knowledge and their skills and their ability to negotiate to come up with the best solution rather than the solution that somebody wants now and is just willing to wait until next year to get it. So that's really important particularly around the benefits. That's another point that I think I would point out. This is the government operations committee. I don't have to tell you that we have a hard time now recruiting and retaining state employees in very difficult positions in state government. Our pension system is 7%, the benefit from the state employees pension system is 7% less than the national average. Now, and so it's really important to have that in mind that if we reduce those benefits significantly, the 30 vacant state trooper position, the nearly 100 vacant correctional officers, the millions of dollars we spend on traveling nurses and IT professionals, that is really going to get worse because the retirement is so, I think one of the things we heard in the public hearings and I hope the house members have learned and maybe we can impart that knowledge to the Senate is that retirement is aspirational for state employees. Every day they work in jobs almost nobody wants to do, difficult jobs in which their life is in danger and they aspire to the day when they can retire with dignity. And when you have a process that locks them out or controls what is done and you cut that benefit too substantially, you not only squash their dreams and their hopes, but you create a situation that has broader implications for state government's ability to deliver public services and in this case, public safety and other really valuable and important provisions. The other thing I would just say is it's very important to our members that this not all fall on them. This was not, the changes in the assumptions and the situation that we're in isn't one where you can just cast blame from to legislators or to state employees. It's not that simple. We've been very clear with our members that at least on the state employee side that the legislature has always funded their pension and that in fact in the last few years they put more in than what was required. It's not the state employees' sole responsibility to solve this on their backs. And so we asked the house and we would hope that this process of a task force would spend significant amount of time on a dedicated revenue source because one time money is helpful. It's just not that helpful. Having money as a treasurer said to us early on in the fall when we started talking with her spending two or three hours twice a week at least trying to find a solution. You could put one time money in like the $150 million that's being held in reserve. It doesn't really make as big a difference in the unfunded liability as if you were to dedicate a revenue source. The state of Colorado has dedicated the revenue from their leases on their ski areas to the unfunded liability in their pension system. That has got to be a centerpiece of the outcome. It can't just be on what benefits we're gonna cut for state employees and how much more can we take out of their checks. It's gotta be also an acknowledgement that we have to have a dedicated revenue as part of that solution. I think the last thing I would just say is transparency is really, really important. And one of the things that we asked for and I think it's probably gonna be just sort of common sense. Our members, one of the silver linings of doing this in COVID, which you couldn't have a worst year to have a proposal like this than one in which our members are at the tail end of having led the state of Vermont through a pandemic. Our members are exhausted. I suspect the teachers would say the same thing. This has been an incredible roller coaster for them. But one of the silver linings is that they watched the legislature on YouTube and they are able to see what's going on in their state house in a way that they haven't really ever before. So it's very important, I think that every single one of these 15 meetings, that's the number we settle on, that they be on YouTube, that they be publicly available in a way that's accessible to people who work 12 or 16 hour shifts and who might be watching it in the middle of the night. That's just another point that I would make. So right now we cannot support the bill as it passed out of the House Government Operations Committee. We don't think it's fair and balanced or balanced and fair, however you want to say it. And we think with just some slight improvements of just balancing out the membership, taking some of the prescriptive language out, we could have a process that we believe in and that could actually have the credibility that would lend itself to a real solution that the legislature could consider next year. Thank you. Any questions for Steve? And I just want to make sure that you understand we're not getting into detail today about either of these two because we'll be getting into that detail on Tuesday and Wednesday. But Senator Calamore. Thank you Madam Chair. And I think I can stay high enough in terms of my, I chose the wrong word. So again, Steve, without getting into specifics and I know how many members there are going to be who are potentially could be on the task force, how would you characterize the imbalance right now? And I don't believe. I'm going to ask us to wait with that question until we've actually had a chance to walk through the section that deals with the task force and then for Steve to answer us because we haven't even walked through that yet. Many of us have read it, but I think that's a detailed question that we need to leave for Wednesday. I'm sorry, Senator Calamore, but I think that is asking him questions that go beyond, and I have some thoughts about that, but yeah. All right, that's fine. Okay, Senator Ram. I think this is high level and I feel like the chair is going to like disappear from the wrong side. I just want to make sure that we don't, we still have to hear from Jeff Fannin and Michael Neal about their initial reactions and where they are, and then Becky will be with us and walk us through. And I just want to make sure that we don't get into such detail today without having at least walked through so we know what we're talking about. Right, so then. Okay. So Senator Rom, did you have a question? So, and maybe this is one that others can answer too from their respective positions and those they represent. You know, I think it strikes people when we hear 13% of our budget is going to, you know, fund our retirement system, but at the same time, a lot of our money goes to personnel. So would you say that's pretty normal around the country? Is there a reason you think we might be an outlier in how much we're spending on retirement or is that just a natural byproduct of us spending the necessary resources on personnel? I think that's a very good question, Senator Rom, and I'm trying desperately not to disappoint the chair. So I'm going to be very careful about how I answer this. The sky is not falling. We are not in a crisis. The pension system isn't going to fail tomorrow. And that is, I think, an important thing to remember. There's $5 billion in assets. And in 2010, we entered into a plan to pay off the bulk of the unfunded liability. The legislature knew at that time, the treasurer and certainly the unions knew that the ADEC would automatically increase, that there would be increased payments to the ADEC. It should not be a surprise to anybody that the ADEC is increasing. The $96 million that is higher in this particular discussion is because of the change in assumptions. It's directly related to the change in assumptions. So, yes, we should look at the assumptions. We should find out why our investments haven't historically hit what we thought they would. And potentially, we have a more realistic number now. But I would say that the amount that we have the amount that we are paying should not be a surprise to anybody in the general assembly or the administration, the treasurer's office, it was agreed to in 2010, when the state employees also increased their contribution to the fund. Okay, thanks. I'm going to ask Jeff to weigh in. Yes, Senator Clarkson. Well, just as we begin to prepare ourselves for this conversation, it would be great and we should ask Becky this, but perhaps others have it. And actually, how scovops may already have this, which is comparing exactly to riff off of Keisha's question. Where do our pensions stand in regards to other states? I mean, what percent of their general funds are there? Just some comparisons that would be very helpful as we go into this. I think that we have that. And I think that actually Chris gave us a lot of that information in his presentations and he compared us to both social security states and non-social security states because there's a huge difference. So I think that we can go back and look at his slides. I believe he gave that to us. Yeah, not all of it, but a lot of it, yeah. So, Jeff. Thank you very much, Madam Chair, and welcome to Friday afternoon, committee members. So for the record, Jeff Fannin, Executive Director of Vermont NEA. I thought Steve did a nice job summarizing. So thank you, Steve. I'll try to stay at the high level and not go into the weeds and get weed whacked in the process. Sorry about that. No, no, no, it's fine. No, it's appropriate because you haven't had a chance to go through it and we've been on the house side going through it a lot. And so we will quickly get into the weeds and that's not where you need to be right now and that's understandable. This is a complex topic, no doubt. It is, Steve alluded to, we separately because we're the teacher's plan for the state employees. But we, like Steve and Mike O'Neill, met with the treasurer starting in right before Thanksgiving, twice a week, most weeks, trying to go through this and trying to understand it. So we had the luxury, I guess, coming into this, having had a lot more foundation laid for us. So I can understand your need to get up to speed and not get too far into the weeds before you get that. So if I go there, please pull me back and I'll stop. I will. I know that you will, Madam Chair. A couple of high level thoughts. So when we talk about composition and Steve talked about it, and we didn't rehearse this. I have not spoken with Steve today, I promise you. When we talk about balance and fairness, what I think of, and it maybe goes to your question, Senator Collamore, is balance would be plan participant and non-plan participant. So some people call it different things, but that's how I see it. If you're a plan participant, you're in the plan. And if you're not in the plan, you're a non-plan participant. So we see this as plan, the balance, necessary balance on the task force between plan participant and non-plan participant. So that's how I see it. And that's why when I say balance, that's what I'm talking about. So maybe somebody else is mentioning it in a different way, but that's how we see it. And so also as well, we think there needs to be balance in their charge. So simply, you know, alluding to what Steve suggested, my members, the teacher members, who are watching and concerned and doing their hard work, maybe they're probably still in school now, may watch it later, but they don't wanna, the process that they saw leading up to age 449, they didn't think was necessarily fair. And so that was what they came out and spoke about in the two public hearings. The first one just, you know, was truncated by a lot of, there was an electoral storm and a lot of people lost power. So that number kind of dropped down a little bit. I think there were 18 non-shows, no shows that day, probably didn't have power. But so we think the charge of the committee of the task force, excuse me, needs to be balanced as well. So that's what, you know, when we come to you next week, next Wednesday, when you have that discussion, it's not only just composition of who is on the committee, but also the charge of the committee to make sure that there's fairness and process of the charge that the task force will look at. So in concept, with some tweaks, as Steve mentioned, we think the idea is the right approach. Let's look under the hood. Let's see what happened, how did we get here? And as Steve alluded to, the two changes last year that dramatically changed the numbers that you're facing, that we're all facing this year now. One was a relook at the demographic assumptions of the plans, and the other was the rate of return. Now, those came up, those were sort of what I would call human changes, right? People made decisions that then have the state, if you will, or all of us needing to contribute more. And that's what's being asked. But that's because actuaries changed their assumptions last year, and the investment people changed their assumptions, the rate of return assumption, they lowered it. And they recommend that lowering to the three boards. So as Tom Galanca mentioned, he's a member of the Vemur's Board, the municipal employees board. And just for a quick side trip here, two thirds of the people in Vemur's, the planned participants are school employees. So if you're not a teacher, you're a bus driver, you're a cafeteria worker, a paraeducator, and your school district, it's not required, but if they do, and most do, participates in the Vemur system, the municipal system. Two thirds of the people in the Vemur system are school-based employees. Obviously the teachers are all teachers, they're licensed teachers, but that includes administrators as well. So principals and superintendents are also in the teacher system. And then of course the state employees, I'll let Stephen Mike worry about, not worry about that, but explain to you those folks. Those are the three systems at issue here. And really the Vemur system is not at issue. The Vemur system, as Tom will probably better explain, is on better financial footing. And it's a teacher system and the state employee system that we're discussing. So just sort of setting the table a bit about what you'll be discussing next week. And also I'll go into that. So I met this morning for a couple hours with some administrators. I do this annually. I'm invited in and we have a good conversation about labor management issues, school pedagogy issues, and other matters that administrators worry about. And we frankly do as well. And we thought we'd have a conversation. So I do that annually. And they are tired, the teachers are tired. This has been an incredibly challenging year. And we're over a year now of being in a Zoom environment for teaching. So I know it's tough for you and for all of us. And I would much rather be in the state house. But to teach kids, part time, not part time, but some kids are there on Monday, Wednesday, some of their Tuesday, Thursday, it's a hybrid system. A lot of the elementary schools are in full time, but some segment of those kids are being taught via Zoom or otherwise, other platforms because for whatever reason they can't be in school or don't want to be in school. So there's a variety of different settings that teachers are operating in right now. And they're tired, they're tough. They're tough, but they are really tired and to get these proposed changes a few months ago and a few weeks ago was like a kick in the stomach. And so that's what they reacted to. That's why there's a lot of email communication with all of you here and your counterparts in the Senate and the House. But that leads me to this overarching concern I have is recruitment and retention of teachers. It is, I hear it, we hear it a lot and we're hearing a lot. Superintendent in Slate Valley, which is over on the western side of the state next to New York, Slate Valley, Fairhaven. 40, I think it was 39 vacancies. Teachers have options on the border particularly they go to New York and make more money in salary and in benefits, including pension, Massachusetts the same, now they're not a social security state so they don't contribute to social security. So it's a little different there, I admit that, but New Hampshire as well. So there's a lot of people who are looking around and deciding whether they want to continue to teach. And I think one of the demographic challenges the actuaries readjusted for was that people weren't staying in the teaching system, teacher system, as long as they used to. And so by potentially lowering their benefit and asking them to work a little bit longer and pay a little bit more, I'm not sure we're trying to, we're going to address the problem. If we're not doing that, we're not talking about benefit. I understand, but looking at it is going to possibly exacerbate a problem that. It probably will, but I don't think we should assume that we're going to go anywhere. I know. So, but all I'm saying is the recruitment and retention issue, I think needs to be part of the task force's mission because it's part of what is the reality on the ground about the pension system. So I think, you know, I think the task force should look at that. The, and Steve alluded to it in the state system has not been underfunded, but the teacher system was up until 2007, 25 of the 29 years, dating back to 1979, the teacher system was underfunded. In some cases, 33% of what the actuaries recommended, I think it was 38% maybe. So those, that's sort of reverse compounding. We think that needs to be baked into the task force mission to look at that and incorporate that into its thinking. So, you know, those are sort of the high level. And finally, I'll close with, we did, as Steve alluded to, we very much were participating in the discussion back in 2010 and 2014. So teachers then were asked to pay more, work a little bit longer, but they were able to, we were able to achieve a balance in what was asked of them and what was asked of the state. So everybody gave a little bit and got a little bit, if you will, in 2010. And then in 2014, we made some moderate changes again. So those are, we think that's the right approach. We appreciate, I definitely appreciate representative Hans, it's Copeland Hazis and Gannon's efforts in the house. The bills improved from what it was. I still have some tweaks along the way and we think we can do that here in the Senate, maybe if it doesn't happen in the house. And so I thank them, the house members here and in the committee, they did good work. It's not easy on Zoom. And we hope to continue that good work here in the Senate with you and make some refinements as necessary. Assuming it comes out of the house next week is I think we all do. So we will be back. I appreciate knowing now in advance of governance on Tuesday task force on Wednesday and we'll prepare accordingly. Thank you. Thank you. Yes, Senator Rom. Thanks, Jeff. As you were talking about what the task force should be looking at, it made me think of externalized costs of reducing the amount of savings people have when they're older. And I think we see that particularly for older women, they are more likely to slip into poverty and have their fixed income not meet their basic needs. So I just wonder if you forwarded any thoughts like that to the house committee on the experience of having 75% of teachers being women and that impact that could be had on the externalized costs to our state of having them have less income. I did and I think we can do better than some of the language that's there. I'll just say that. And I was in Senate GovOps back in the early odds when they had to increase teacher pensions for some folks at the bottom who were living well, well below the poverty line. So we had teachers and so we had to unilaterally, you, your predecessors in the Senate GovOps committee had to unilaterally increase teacher pensions because they were just so improt, not, you know, they were just not what they should be, frankly, they were well below the poverty line. And you're right, 77%, I believe, are women in the teacher system. So the gender issue is real and we need to make sure that we don't exacerbate that problem, I'll say it that way. Thanks. I'm gonna jump to Mike O'Neill from VTA unless there's something else burning for Jeff. Thank you. Thanks, Mike. Good afternoon, committee. Mike O'Neill for the record, director of the Montreux Business Association. Thanks for the opportunity to speak about this. And, you know, I anticipated getting into more detail today. So to be honest on a Friday afternoon, I'm glad that we don't need to. And Steve and Jeff touched on just about everything that I would say as far as concerns we have from the VTA. Yeah, Jeff said he and Steve didn't talk today and plan their testimony, but Steve and I did spend a lot of time talking today. We spend a considerable amount of time, you know, trying to address the concerns our members have. Like Sarah mentioned earlier, the misinformation that is out there with a lot of our members, we're spending a lot of time trying to correct that and making sure there is an understanding of how we got here, the things that have led us here, what has taken place in the committee and the decisions that have been made and why. And we appreciate the point that this is at where we are talking about a task force to look at what the recommendation should be as far as what savings should be looked at, what the benefit changes if any should be or how those should be structured. Yeah, we feel the most important thing, like Jeff and Steve have both said, is balance on this task force. Yeah, is labor fairly represented on this so that it is a conversation, everybody walks away from, feel like they were heard. And whatever conclusion the task force comes to and whatever recommendation is made, we're going to have another reaction next year from our members. And our open goal is that it's one that they're in favor and support of whatever the task force recommends. Jeff just said one of the most important things that should be looked at from the task force is recruitment and retention. Retirement benefits are expensive, but what is the cost of doing damage to the workforce that may take years and years to recover from? There is already a big feeling from our members from the troopers that it's time for them to start looking at other employment. And for state police, a lot of our members will look at other states. For state employees, they may look at the border in states, the same for teachers. And it's not that hard to go across the border. For law enforcement, we're already facing a crisis and trying to recruit and retain the people we have. It is not a profession right now that is easy to attract people to. And I don't think we need to get into the reasons why I think those are very obvious. But I don't think there could be a more important time for us to be ensuring that we are maintaining our ability to recruit and retain or even enhance that ability because we can't face a problem where we're losing people and we can't replace them with good people. It's just something we can't survive right now. And I know Steve and Jeff are thinking the exact same thing that's not unique just to law enforcement. We just happen to have a big problem with that right now. So whatever the task force recommends, I think that has to be a huge part of what they're looking at is if we make changes, what does that do to our workforce? And is there a cost to that? Because we can't afford not to look at that. I think that's all I need to say for today. I'm looking forward to getting into more detail on this next week. Thank you. Any questions for Mike right now? I will say that the whole issue, and this isn't just related to this, but I just given what we were doing right before we got here, recruitment and retention is an issue in almost every profession in Vermont. And we just heard for, and for those of us who live in border communities, it's particularly an issue. And we just heard from our EMS people this morning, for example, that they just lost four paramedics to Massachusetts because they can't, because we can't pay them. So it is a, and that's happening on the Western side of the state and on the Eastern side of the state. And so it's a huge issue. We can't solve all of those problems, but we can, we will address them where we can. And this is one of the areas where we have some say in that, but it is a huge issue for all professions. Nurses, lots of people. So, okay, committee, oh, it's Senator Rahm. I feel, you know, I just don't know where the conversation will go next week. So, oh, it's gonna go into a lot of detail. Believe me, we're gonna have four hours each day. You know, as we look at maybe ways that this task force can be kind of, I don't know if I wanna say visionary, but like really look at, you know, quality of life and how it relates to retirement age, et cetera. I was just struck by, you know, obviously troopers were particularly concerned about the age change. I'm not getting into what was in the past spell. Sorry Madam Chair, but it made me wonder, you know, some people reached out with very similarly physical jobs, dangerous jobs, demanding jobs that made me wonder about looking at retirement age for other similarly demanding jobs to law enforcement. And I wondered if you had any thoughts on that or if you ever sort of advocated. If I can throw out the, I think Rep. Senator, Copeland Hans has said that the task force is specifically to address DOC because they do have, are in that category. And so we will hear from that, but I don't know if Mike wanted to answer that. I can try to, what I can tell you about our membership and the people that we recruit, retirement is one of the biggest benefits they look at when making decisions on whether or not to come into the workforce or whether or not to stay. It's, you know, something everybody nowadays really focuses on, you know, at the end of your working career, what is going to be there for you. And, you know, without getting deep into it, a lot of our members understand as we believe there's a contract with retirement. You know, when you start paying your contributions into the system, we believe there's a contract that you are guaranteed those benefits. And when they heard those benefits could be taken away, there was an extreme reaction in the public comments that the committee took. So it's something that we have to look at not only for, you know, law enforcement and what the retirement age is for everybody. You know, what is the right benefit structure to retain and recruit our people? Money shouldn't be the only factor in determining what retirement benefits are and what the cost is. There is a cost for maintaining these benefits, but there's a cost for not maintaining them. Okay, thank you. And please feel free to stay with us. As I see, we've been joined by Becky to stay with us as she walks us through. And we, when we walk through a bill, we live, well, we don't live it. We try to limit our questions of the drafter to questions of technical concerns or what this actually means because the drafter of the legislation is not responsible for the, why did they do this or why didn't they do this? So we, but you might get some, as we walk through it, there might be technical questions that we have that might help you understand where some of us might be going next week. So Senator Clarkson. Madam Chair, we've been sitting. I was going to suggest a five minute break. I just looked at the clock and then I saw that Becky joined us, but yes, we need a five minute break. We've been here since one o'clock. So five minutes, we'll be back.