Thank you. Okay. It is Friday, January 14th. This is Senate Government Operations and we are looking at pensions today and we have, I can't believe that you're all here and Andrew is coming in at 2.30. He's gonna take a little break at 2.30. So what I'm gonna do is first have the committee introduce themselves because you may not know all of us. You probably know me. I'm Jeanette White from Wyndham County. I'm Anthony Polina from Washington County. My name is Collin, I'm representing the Rutland County District. Allison Clarkson representing the Windsor District and it is really great to see you and nice and that Kate very briefly. It's lovely to see you all and thank you for your hard work. We're really all so grateful. And we will hopefully be joined by Senator Keshia Rom-Hinsdale from Chittenden County. And what I'm gonna do right now is let the, first of all, is anybody under a real time constrained here and needs to speak and get out of here right away. Oh, Dan? Dan, do you? Yeah, I'm at a jury trial and they're gonna be, I think, sending the case to the jury really soon. So I'm on lunch break. So what I'm gonna do then is start with Dan and have you introduce yourself, what your role was on the task course and just some observations and whatever you wanna say about where we landed and we have gone through a lot of it. We're gonna have Chris walk us through even more details today and Jane Kitchell will be joining us again today to walk through the state obligations. So Dan, if you would like to start introduce yourself and oh, and there's Senator Rom-Hinsdale. Thank you. Okay, Dan, if you'd like to start. Sure, I'm Dan Trottier. I'm with the Troopers Association. So I was represented for the VTA and the Group C membership of the of the V-SIRS pension plan. So that was good. Number one, I want to take a second to, at least on behalf of the VTA membership, because I'm sure a lot of them, you know, they pay attention, but they're not quite sure how the whole process played out to where we are. So I think it's important to, hey, thank this committee, because I know this committee had an extremely big role in getting us to where we were to actually be able to come back, sit at the table as a group and come up with an agreement that I think works for all of us. So I want to at least take a moment on the behalf of our members to thank this committee for that and getting us to that place as we're going. So in general, you know, I think the process went the way I guess I anticipated it would go. It took us a little while, I think, to just kind of get comfortable with each other and understanding what the perspectives and where we were coming from at the end. But I think at the end of the day, we stuck to what we agreed to, which is we were going to come work collaborative to make a deal that works for both sides. And I think that both sides are comfortable with and can work with. And I definitely think we reached that. And as far as I have heard, you know, again, there's never there's never 100% of anything. But so far, what I have heard from from the folks in our in our group and just from people around is, I think there's a sigh of relief. I think the the pensioners are grateful that we were able to come to an agreement that works for both sides. And I have yet to hear anyone have any misgivings about this agreement or anything like that. So I think we're in a good place. And it is certainly because of the hard work from everybody on the task force together. So thank you, Dan. And what I'm going to do is I'm going to instead of each time one of you speaks, say how grateful we are for your participation, say it now to all of you. We this could not have happened without the hard work of the six of you who represented the the pension, the beneficiaries and the active members. So I have those of you who didn't serve on the task force. It it was it was really, really hard work. And that these six people were crucial to that hard work and worked really hard to get us where we are. And and most importantly, I believe we work together respectfully. So I I just wanted to say that upfront so that I don't have to say that after each one of you speaks because it's true for each one of you. So thank you, Dan.  All right, I appreciate everyone having a great weekend.  So good. Thank you. Thank you, everyone. So I'm going to jump to Kate next because I know Kate has is it in school and has a limited time here right now. So Kate, do you want to introduce yourself and say whatever you want to say? Sure. I'm Kate McCann. I teach here at U 32 High School in Montpelier. I'm very grateful and appreciative to have been selected to advocate and represent my colleagues around the state who are both in the classroom and have retired and are out of the classroom now. I guess I would add to what Dan said that it was a lot of hard work and we heard a lot of testimony and we heard we were listening to understand the scope of the problem. We were investigating the different levers and possible solutions. We looked at some possible revenue streams for how to pay for paying down the pension problem. And we also heard from Tom Galanca with VPIC to talk about the Vermont Pension Investment Committee. I think for me sitting there each time and being part of this process, I came always with the lens about the role that the pension system plays on the retention and recruitment of teachers. For me, yes, we have a pension problem, but the the crisis is really in the workforce. We have a lot of unfilled positions around the state for positions that are unfilled when we are interviewing. We used to get maybe 20 applicants. Now it's hard to find three applicants and of those three applicants, maybe one or none of them are really qualified to do the job. So we have big shortages in special education. I know here we don't have a driver's ed teacher, which is sort of low on the priority. But we do have young people who want to become drivers. So we've got issues just about everywhere in the state. And I know that the pension system is is a tool. It's one of the tools. It's for the, you know, to for overall compensation for the work that teachers do in the state. So thank you for the opportunity to speak with you here today. And thank you, Jeanette, for for chairing the task force. Thank you, Kate. So Kate, today with us as long as you want, we'll understand when you have to pop off. So I think I'm going to jump to Leona next. And one of the things before Leona introduces herself, I want to say that Leona was kind of our social calendar director. I'm not sure that that's the right word. But at one point, Leona suggested that maybe a way to get us excited and motivated. And we had, she suggested a secret Santa exchange among the task force members. And at first, I thought, no, and then we embraced the idea. And it was so much fun. It really was fun. And the gifts were thoughtful and showed that people were paying attention and kind of understood who each other were and stuff. So thank you, Leona, for being our social director. You're welcome. So do you want to introduce yourself and say whatever you want to say? Okay, hi, everyone. Wait, wait, Senator Paul, Polina has a question.  Are you calling in from Barbados or something? No, I just love this background. I wish I was. Hello, everyone. I am Leona Watt with the CERS and I'm also a senior probation officer out of Springfield probation in parole. And it has been a journey since July on the task force. You know, we came together. And I think, you know, it was sort of like, we want this and then you want this and it was a sort of like getting and I think someone already mentioned it. It's a getting to know you point. And we really got to know each other over the last six months and really understanding and I said this before, really understanding, this is not not about labor versus the legislature. This is about those who care about Vermont trying to do the best for Vermont's future that includes the legislature and those of us who are Vermonters or contribute to the Vermont system. So this is about caring about Vermont and getting on that that equal footing up. We're all here for the same purpose. It's just that we're just saying, you know, for the labor side, and me representing visors, we're just asking for the least amount least amount of the hit to our pension system and how can we work together to get to a on equal footing. And I feel that the plan that we have recommended is a great plan to get on some solid footing for the Vermont pension system. And I'm excited for this season. I call it the season, the season of pension moving this along. Because there's been a lot of work put into it. A lot of work, a lot of meetings. And I do and I think I'm not going to just go over it again. But I do appreciate everything that everybody who was on the the task force contributed. And it was nice getting to know everyone. And I just feel like this plan is a good solid plan. Thank you, Leona. And to you as well, stay with us as long as you want. But we understand that there are times when you just have to pop off and go to work. So but stay with us as long as you would like. Thank you, Leona. So Eric. Thank you, Madam Chair. I'd also like to thank this committee. First and foremost, I felt like you all took a really thoughtful approach at thinking about this issue last session. And I also want to thank everyone on the task force, the legislators, I fellow labor members, and also Michael from the Treasurer's Office. I thought everyone really brought creative solutions to the table. Everyone was really engaged in the process and in a very collaborative manner. I mean, there certainly was getting to know you periods. But and I'd also like to thank thank our members for staying engaged in the process and letting me know how they felt about certain aspects of our discussions at various points in time. Dan, I'm glad to hear how your membership has responded. I think we've definitely heard a lot from members. And they're not all size relief. So I do just want to recognize that this this recommendation looks looks a lot different than maybe some of the proposals that that I came out last year. But I don't want to minimize the sacrifice of of our members in in that that that's embodied in this in this agreement. For me, I think a successful or a to have success in this process would be an agreement that recognizes the pensions are incredibly important to employees as the foundation of their retirement as a huge part of their compensation as employees, but also really important to the state as as Kate said, you know, there are key workforce issues right now and the pensions are really important to retaining and recruiting employees. So if if we were going to get to a place that I think we got to in the end, I think all parties we're going to have to recognize that it's it's important to important to everyone in the in the state of Vermont that that we address this issue. And that means that everyone is going to have to come together and see what they can pitch it do to pitch in to put the pensions in a better place. And I think what we were able to come together on at the end of the day does represent that. It represents that. I do just want to say, people are we were really, you know, working on this feverishly at the end. And I do want to I think we'll have to really pay attention to the legislative text as it's drafted and make sure everything encompasses are what we discussed in the task force. I know I've had some members reach out about Group C and mandatory retirement age versus normal retirement age. So I just I just want to, you know, put put that out there that will really have to pay attention to how the details are captured in the legislative text. But I'm really proud of where we got to at the end of the at the end of this long process. And I'm really proud of every other member on the task force for what they brought to the table. Thank you, Eric. I'm going to we we have we have three of the task force members here with us. I just wonder if as long as they're able to stay with us for a few more minutes, if any of you have any questions for them, if they're willing to take any questions. Yes, Senator Polina. Yeah, I don't know if this is a question you can answer or not, but I'm wondering whether when this task force when you were pointed to the task force, and you just started going to the meetings. By the time you left, is there anything that kind of surprised you where you went in and realized like, Oh, I didn't know that this was something that you hadn't thought about that maybe helped form the direction that you thought we should go in. Like something that surprised you to learn about the pensions or about the process. Anybody Something that surprised me was I didn't realize what aspects affected which things like which which things would reduce ADAC, which would reduce unfunded liability, which played into OPEB, all of that. Like so, for instance, like increasing contributions for teachers, what effect does that have on reducing the problem? Those those were some of the questions that got answered along the way. Thanks. Any Eric, Leona? I think for me, I'm just making sure I'm unmuted. That's always my concern. I think for me, it was just a really because I've been to the state house before, you know, and I've been to hearings and set there. But really, just just seeing how, you know, with the information and trying to get through the information and try to come to a consensus. That was a very intriguing process. And I wasn't expecting the that type of process. And I'm just really glad to know that process and understand what you guys deal with when you're at the state house. It was great to get a little more behind the scenes, so to speak, on how these how your different committees work, because it was interesting. It was a very interesting and I learned a lot, a lot. And also how, as legislators, we're often thrown into issues that we don't know a lot about until we start dealing with them. So it is kind of interesting all the time. Yes, there's people think people think we actually know what we're doing on these issues all the time. We don't forget that. I need to remember that we're learning as we go along as well. Yeah. Eric, did you have anything to add to that? I would say I really I got an appreciation, a deeper appreciation for the legislative process. And also, I sit on the board of the retirement system. So I felt like on the pension side of things, you know, I connected the dots, I think, but connecting that to the state budget, I think, I think that was, I learned a lot, a lot there and how the different committees interact. And, you know, just how going back to the legislative process piece, how people can bring different perspectives to the table and work collaboratively, collaboratively within those to develop a kind of a shared understanding. It was, it was, it was, it was a long process. It was, it was, it was certainly tough at many times, but it was a really rewarding process at the end of the, you know, at the end of our journey. So I'm going to say something and then go to Senator Clarkson, but one of the things that at our last pension task force meeting, which I guess it was a week ago, Monday now, no, this Monday, the 10th, it was just then, Michael Neil, from the Troopers Association said that he was, I don't know who's sending chats here, but we don't use chats, and I can't read them on my iPad. So if you're trying to chat with me, it doesn't work. So anyway, we don't use chat in here. I should have mentioned that before. But one of the things that Mike pointed out was that when we set up the task force to begin with, we had six members representing the employees and the teachers and the retirees, and six members not representing them. And Mike said he was very concerned about that, because what if there was a tie vote? And how would we deal with that? And I said, we are not going to have a tie vote. We are going to have a unanimous vote, or we're not going to have a vote. And we did. So he reminded us of that, that we did not need to have a tie breaker, because unless we came out of here with unanimity, it was not, it really wasn't what the right solution. So Senator Clarkson, did you? Yes, I have a question. And I, again, I just applaud you all for your work together and coming to consensus and all of our new appreciations for each other and how we all impact the system and how Vermonters help, you know, how we all pay for it in many ways together. I guess my question to you is sort of goes to Eric's point, which is, we know that not all the members are sowing a sigh of relief. And so my question to the three of you is, how are you involved in the education rollout so that people understand your work and understand the decision and the package you have helped put together and that we're all invested in? And what, you know, what's the plan for education?  Yes, I've spent a lot of time on Facebook because we have a Facebook, a private Facebook group for VSEA. And the last week, I have spent so much time going in there, we were having, we've had a meeting, you know, like here, you know, not a hearing, but a VSEA meeting just to have people ask questions, be able to explain the decisions that were made. But I've spent a lot of time on Facebook and in our pension group just saying, hey, this is the reasons why I was like, these are the comparisons. It took a long time. If you go back, it's all on all on YouTube, go through all the hearings. Yeah, since July, we've been doing this, we've been every week, you know, when we've been in in in session with the meetings. This was not a simple process. This was not rushed. These things were thought out. They were argued about. I think some tears were shed. I'm just joking. But these are things that we didn't just pull out of the air. We took time. We talked, we talked, and we talked some more. So I explain in that getting that out there because that's what I think Eric and I we've been doing and our the management and leadership for VSEA have been doing all week. It has been a full week. So it's just been basically making those connections when people email and have questions, responding to those questions, responding to the Facebook comments, because you know, we do have those, we should have no changes. And I just go on there. Well, if we can bury our head in the sand, that would be great. But we're not going to do that. So, and that's when I tell people, they're like, Leona, I'm like, I'm putting on my probation office ahead. I'm going to let the trick you listen, we don't do this. We deal with them. Just hide away and say, I'm going to look and I'll say I don't like it. We don't do that. We deal with it and move forward. Kate, did you Oh, I think Kate had something to add to that. Or I would just add that Vermont NEA is and with with Molly, Andrew and I have put together a contributions calculator so that our members can type in, you know, what their base salary is, and it will kind of tell them what they're what they can expect to pay in an increased contribution. So I think that's going to be helpful for folks. We have all along the process since last spring, we've had a group of folks, local leaders, local Association pension organizers, we call them lapos. And that group has been meeting every month, along the process, and and even more often during the more trying times. And so those local Association pension organizers have been spreading the word all along. We met with them just after we reached the recommendations, we had our vote, and shared the plan with them. And a large, large majority believe that this is a win for retirees. And I don't mean a win like us versus legislature or us versus state or anything like that. But just in terms of like this is something that we can walk away with and and rest more soundly that we have shored up the retirement system for those who will enter into the system anytime soon. And then last but not least, we anticipate holding a town hall for our members on Monday, the 24th, I believe that's a Monday, after next week's hearing, or whatever we're calling that in the evening, the answer some more questions. Yeah. So we'll have our own town hall after that public hearing. Thanks, Kate. And I'm going to ask Eric if he has any to add and then I'll okay. Yeah, I would like to add a little bit, Madam Chair. VSEA had a member education meeting. See the recommendations were released on Monday, we held it on Tuesday. So we had a we had a pretty fair turnout turnout for that meeting. VSEA the office itself has been sending out communications both on Monday and Tuesday, summarizing the recommendations. And those communications have had myself and Leona as a point of contact on them. So we've been spending a lot of time talking to members, both via email and spending a lot of time on the phone as well. People emailing and saying, you know, can you make all I'd really like to just to talk through this with you. So anyone who who reaches out and wants to know more about how we arrived at the process and why we supported the recommendations that we did, we've been we've been engaging with those folks. And that doesn't mean we we've convinced everyone that we've talked to, but I think people appreciate it either way. So just a lot of engagement with members is is how we've been communicating why we supported the recommendations we did. So I before I go to Senator Rom Hinsdale, I'm going to say that the same question could be asked about us, because there are 180 of us and there were five on the five legislators on the task force. So there are 175 other people out there, including the four of you on this committee that weren't involved in all of that. And so our job is to convince those 175 other people that this is the that this is the package that we need to support. So it isn't just it's it's us convincing our colleagues also. Well, and and people should know we've begun that. Yes, we have. That process has begun and has been robust. So yeah. So Senator Rom Hinsdale, did you have a question? Yeah, thank you, Madam Chair. First of all, I hope we can enlist your help if it hasn't already happened to put a Tuesday pension here on your Facebook groups and communication channels for folks. I started to tell some teachers and they haven't seen it. So that would be great. And then if it's possible for us to listen into the town hall, I understand if not, but it might be helpful for us if it's a somewhat public to to hear what folks have to say. So that's an aside. My question is I was surprised to learn from Chris Roup when we got feedback in the beginning of session that workforce turnover is probably one of the biggest factors in what has contributed to this unfunded liability. Did did you all get to talk about that? That's I know faces are looking confused, but that's what Chris said. No, I think that I think that it was the demographic and I'll let Chris answer that. But I think it was the the experience of the demographic that the people retiring, there are more people who are retiring. It isn't turnover. It's people. More people are retiring. Chris. Oh, I'm. Madam chair, if I may, Chris, for joint fiscal, the yeah, the one of the biggest drivers in both systems was the demographics and net turnover, we would consider a demographic factor. It really played out big on the teacher system, especially and what when we talk about net turnover, we what that really means is fewer people left earlier in their careers for reasons other than retirement, then then assumed and more people worked until retirement and left upon retirement then was assumed. So when you go back over the last decade or so, this all comes down to the theme of the workforce behavior just was different than what the actuaries assumed it would. You know, the teaching workforce has contracted and there's been retirement incentives and things like that in in prior years that that has added to pension obligations. OK, well, I had what I had wondered if the struggle to find teachers to fill positions, you know, was something that you thought the legislature should look at in the larger context of who we are as the you know, as employers in the state if you felt like you wanted to share something with the legislature about why you think you're having so few people apply to become teachers and if it's something we can improve. I guess that's for you, Kate. I'm sorry. Can you repeat the question? Yeah, you know, I mean, I think I think state employees are facing the same issue. We just heard it more starkly from you that you're you're having a hard time attracting people to positions, whereas in the past there'd be much more competition. And that, you know, will is going to continue to strain on the workforce. Is there anything you want to say to the legislature about how to help make these positions more attractive? Because this committee is essentially the kind of employer of state employees and, you know, how not of teachers. No, yeah, but not of teachers. I think that right now the two biggest worries that people have are are their health and well-being of themselves and their families and then this this pension system. So I think seeing this move through the legislature and on to the desk of the governor would be a great message sent to young teachers that that maybe they've made a good choice and and that the promise that that there would be this you know, system for them when they retire is is going to be kept and that there's this new. I mean, Peter Fagan wouldn't say it's new because he continues to tell me that the bill has been paid, but there's sort of like this new commitment with the the above the ADEC payments suggested in these recommendations that allows one to believe whether they're a new educator or have been here a while like myself that the system will be there for them when it's time for them to retire. I think that that goes a long way. We've also had a recent win with the health care after it went through arbitration and things like that, that, you know, we can keep the costs low, at least for a couple more years. But that's that's a rising concern. And even though we get these little wins every now and then, you know, universal health care would go a long way in in helping us as well. So, you know, just figuring out a way to make prescription affordable and whatever. And now now we have this new new problem right with COVID. And this is what I put in the chair, the chat, Senator White was that if you have any ability whatsoever to help us continue with surveillance testing and also help us get the best masks possible for for staff and students, it would be greatly appreciated. And I know I'm just sort of using my time here and putting in this plug. But we're struggling, we're struggling with mental health, we're struggling with with sickness and we're struggling just to sort of keep our heads above water right now. And like like a lot of people. So thank you. Thanks, Kate. And I think that we saw also that DOC, for example, the Department of Corrections is staffed at about 56 percent. And there have been there are ongoing conversations around bonus by Kate. Thank you so much. Thank you. So there and this committee has made the commitment to continue to work with state employees and particularly DOC right now to to try and figure out how to move forward. Madam Chair, if I could add to that, I was going to pick up on for the continued work that that you just alluded to. I think turnover, the cost of that on the retirement plan has been more of an issue on the teacher side. But on this for the state employees plan, there have been costs related to retirements.  All of this stuff has changed about my job. I'm going to I'm going to keep going. We've we've the part of the recommendations is directing the Visors Board of Trustees to both look at Group G, this a potential plan for correctional officers to deal with the the the the stressful nature and the turnover associated with that job. But the other item that that it was directed for additional work was trying to pursue a incentive for Group F that would entice people to keep to keep working after they have their years in. We were able to construct something for Group C in the recommendations just because of the retirement behavior of Group C is different. But for Group F, it will take a little bit more work. But the actuarial analysis showed there's the potential for cost savings there. So we have to think carefully about how that's structured. But that is a very that that is a concrete way where we could work to reduce those demographic costs to the retirement plan. And it's it's something that really does make sense to pursue. So we need to report back to you with with more information on that later. So we have Chris with us. So thank you, Leona and Eric. And again, for all of your hard work and the civil and respectful nature that I think we we were able to pull this off with. OK. All right. Thank you. You can stay as long as you want, you know. I have to go to another meeting, but thank you. Have a good afternoon. Thanks a lot. Thanks, Leona. Thank you, Madam Chair, for all of your work through this process and leadership and, you know, steering the ship in the right direction and helping to get as to where we got to at the end of the end of the day. Thank you. Your role was critical. Thank you. Thank you. OK, we are going to committee like we are going to be joined by Jane Kitchell at around two. I have no idea what time it is right now. She's going to join us about quarter of. OK, she's going to join us around to just to remind us about the because now that we've had a chance or hopefully everybody has had a chance to read the report or at least read the summary and the kind of packages and all of that, Jane is going to join us again to talk about. Remind us the state's commitment here and how that fits together and how how we're looking at where the money comes from and how how we go forward with that. And then Andrew is going to join us at about two thirty. He's going to take a little break from his kindergarten kids and join us then so that he can share his thoughts. So what I'd like to do, I guess, is I guess I see. I just wanted to add another couple of schedule notes. Rebecca Wasserman will be joining us at two. Treasure appears will be joining us at three. OK, great. And then we can have Mike Ferrant at the end of the day. If we have any questions about the logistics for the Tuesday hearing. Oh, great, great. OK, thank you. So I guess, Chris, if you want to go, I know that this gets a little repetitive sometimes and we have to go over it many times. But some of us, I see Eric is still on there. So some of us have had the pleasure of going over this stuff for eight months. And this committee has not had that pleasure. And so I think we need to just make sure that everybody gets their questions answered and feels comfortable with where we're going and everything. So, Chris, if you would like to join us, I know that you put together some slides before. So if you would like to do that and we don't normally do a screen share here, but I think we will on this one just because I think it's going to be. Yes, Allison. So, Chris, you had said you were had put together a summary that was several pages long. And I think I found it at the JFO website. And it it it's it's it's not really it's not a wordy. It's not like Becky's. It's not a narrative. It's is that what you're going to be sharing with us today? So I had some slides that that put things into a little more readable format than the one page document. And they're up on the Senate GovOps committee web page under Wednesday's date because I prepared them thinking that we would have time on Wednesday to go through them, but it's the same slide. So and is that what we're going to do now? If if the chair would like me to, I'm happy to do so. Yeah, why? Why don't you to answer the questions and I I will say I know that the the summary that Becky put together at the very beginning of the report and kind of a summary thing is is good and it's good to have the narrative kind of but what people what teachers and state employees want to do is look at the detail. They don't care so much about the the summary and we also need to be comfortable with with those. So I would ask Chris to go and we don't normally do screen share, but I think in this case, that that's the easiest way to do it. If that's OK with the committee. Yeah, and just it's going to be the overview of the final recommendations. Is that what you're doing? Those slides, that's we'll see when soon he puts them up. I know I got him pulled up. That's great. Thanks. OK, it's easier to read on my. I'm so blind. OK, Chris. OK. Gail, does he have the ability to share his oh, I guess he does. All right, you can see that. All right. Yep, yep. All right. Well, good afternoon, everyone, for the record, Chris from the Joint Fiscal Office. So I have just a few slides here that that walked through the recommendations and put some preliminary fiscal estimates around those recommendations. So just as a quick refresher, you know, that when you all passed Act 75 last session, you created this task force and one of the explicit charges of the task force was to develop recommendations to reduce the ADAC. So that's the actuarial determined employer contribution, the bill to the state for the pension system every year and reduce the unfunded liabilities by somewhere between 25 and 100 percent of the size of the year over year growth we saw from FY 21 to FY 22. The numbers over here on the right show you what that translates to. So the 25 percent and the 100 percent values for each system are reflected in that little blue chart on the right. And the packages of recommendations do get within within those ranges. The as as Senator White mentioned, the recommendations were unanimously agreed to on Monday's meeting. The recommendations were put forth by the employee groups. The the levers that were studied under by the actuaries were levers that were suggested by the employee groups and the employee groups put forth their their recommendations. And we were wordsmithing these recommendations through the weekend, through Monday, through the task force meeting itself. So as soon as we pivoted away from that, we then immediately turned to trying to put some numbers together once we knew exactly what the recommendations would be. So that's why they're in they're in separate documents. But the recommendations contain a combination of employee contribution increases, changes to the benefit primarily around cost of living adjustments, commitments of additional state funding to pay down retirement liabilities and pre funding OPEV, the other post employment benefits. That's the subsidized retiree health care benefits. Much of the savings that are expected from the pension changes and the higher employee contributions are essentially redirected into shoring up the long term retirement liabilities and combined in something that I think is very interesting and very notable about these recommendations is they create a path forward to the state reducing its long term unfunded retirement liabilities by about two billion dollars. And that is just tremendous for a state the size of Vermont. And the caveat down here applies. You'll see it throughout my slides that all of our fiscal estimates are preliminary and they may fluctuate due to additional actuarial analysis, some timing issues or the gains and losses we see from other factors. But we have a good estimate of what a lot of these recommendations are likely to generate from prior actuarial analysis and some internal analysis. There have been some things in the recommendations that we didn't previously cost out. But once we have a little more definitive language, we can do so and get a little more specific on exactly which fiscal year we'd realize the savings in the ADAC math. But right now, these are some preliminary numbers just to give you a sense of the scale and the sense of how much the sort of needle moves from each element of the recommendations. So can I ask a couple of questions? You can. Thank you. And I appreciate this report. It's very helpful for me. And I don't have the advantage, as our chair mentioned, of having basically lived this for the last eight months. So some of my questions may seem pretty rudimentary, but here we go. Point number four, much of the savings from pension changes and higher employee contributions redirected. Could I look at that as a layperson as sort of taking advantage of compounding interest? Yes. OK, I thought so, but that's great to hear. And the next point down, combine the recommendations reduced. Is that by two billion by two thousand thirty eight? Or what is the date that you're looking at? Now, that that's two billion dollars within the next year or so. So the biggest component of that savings would be realized and we'll get into this, but it will be realized through the prefunding of the OPEB benefits. So right now we do that on a pay-as-you-go basis, which in the short term is the cheapest course of action, but in the long term is the most expensive course of action for the very thing you touched on about the ability to take advantage of compound interest. So by prefunding, we were basically the sort of crux of this whole thing is the savings the employer would see from some of the pension benefit changes are essentially being plowed back into the retirement liabilities by freeing up the budget capacity needed to prefund the OPEB and make what we'll refer to as a plus payment on the unfunded life pension liability payments moving forward. So the more we pay down sooner, the more we save and interest costs long term because we get to take advantage of that compound interest. Thank you very much. All right, let's take a look at slide three and I'll start by going through some of the V-SIRS recommendations and then we'll wrap up with the teacher recommendations. But something really important to note is with all these recommendations, there were no changes proposed to currently retired or terminated vested members, people who are not actively employed and paying into the system. These are groups of people who have completed their service that they sort of left with the understanding of what their benefit would be. And most of the changes really just applied to current actives and future hires. And a lot of the changes which we'll get into more, particularly around the COLA, the recommendation would not apply to actives who are eligible for normal retirement eligibility as of July one in an effort to not encourage people to retire sooner than they otherwise would. The V-SIRS recommendations call for some phased and higher employee contribution rates over a period of time. Changes to the relatively modest changes to the cost of living adjustment formula that is currently used calls for the state making a $75 million one time payment toward the pension unfunded liability. When you all passed the budget last year, you reserved $150 million in the general fund last year and fenced it off pending recommendations on pension underfunding. The recommendations call for taking half of that $150 million and putting it into each of the systems. So each would get 75 from that $150 million. The recommendations call for the state to commit to making what we'll refer to as an ADEC plus payment beginning in FY24 and growing to $15 million in FY26 and remaining at that level until the pension system reaches 90% funded. So this would essentially be the state committing to making an additional payment of up to $15 million toward the unfunded liability payment that the actuaries recommend. So we sort of accelerate our progress toward paying that unfunded liability down and that also saves us interest costs long term because we can take advantage of compound investment returns instead. Prefunding the OPEB benefits and as Eric mentioned and Leona mentioned earlier commitments for future recommendations to be made on Department of Corrections benefits what we'll refer to as Group G and some longevity incentives. So slide four starts getting into the numbers and this slide really focuses on the recommended proposed employee contribution rates. So the recommendation calls for a beginning in FY23 rates to be increased incrementally in a phased manner. So Group C is the law enforcement group. That's about 450 members. Their recommendation was to have half a percent increases phased in over a three year period. So one of the thinking one of the important considerations for why phasing this in is because you have contractual wage increases that are phased in over time as well. So if you're also phasing in an incremental increase in the pre-tax contribution rate you negate the concern of somebody taking home less pay than they than they otherwise would because they're getting the higher contractual wage increase offsets a great deal of the higher contribution increase. Group D and Group F Group D is the judges. That's around 50 active members and Group F is the largest group. That's everybody else that doesn't fit into Group C and Group D. The proposal was for Group D's contribution increases to mirror the construct that's recommended for Group F and the general construct that was put forth by the VSEA members for Group F is to really try to have a tiered and progressive approach to this where people whose income salary income levels are in the bottom quartile wouldn't see a change and the change would escalate for people in the other three income quartiles. And just as a sense of what those quartiles roughly correspond to, I put those salary levels at the bottom there. But the sort of key theme here is that higher employee contributions offset the normal cost. So if you remember whenever the pension plan assumptions changed about a year ago, the normal cost increased a great deal because of the lower assumed rate of return and the revised demographic assumptions. So employee contributions go toward the normal cost but they do not fully fund the normal cost. They currently cover about half of it across both systems across all active groups. This contribution rate would increase would essentially offset some of the higher normal costs that we saw. So in layman's terms the price of the pension benefit went up when the assumptions changed. So the employee contribution rates are going up to help offset that increase in the pension benefits. That would save employee costs because the piece of the normal cost that employee contributions are insufficient to cover gets funded by the employee or through the ADAC. So if you have more money coming in through employee contributions, you realize commensurate savings on the employer ADAC cost. Slide five gets into the recommendations around the proposed changes to the cost of living adjustments and benefits. So for group C, again, that's the law enforcement and group F, that's pretty much everybody else. It's about 95% of the universe. The proposal is that beginning in July, the COLA structure would be modified by reducing the current 1% minimum and 5% maximum of the net change in the consumer price index that we use for calculating the COLA to a 0% minimum and a 4% maximum. And also extending the period of time that one must be retired before they receive their first COLA from the current 12 month minimum to a 24 month minimum. And an important thing of important provision, which is why I've highlighted in red is that the recommendation calls for exempting active employees who are eligible for normal, unreduced retirement as of July 1st from those changes. For group C, group C's benefit looks a little different. They are also unique to them recommended increasing the mandatory retirement age from 55 to 57. This does not mean people are required to work from 55 to 57. Group C members are currently eligible for unreduced early retirement at age 50 if they have at least 20 years of service. Virtually all the active group C members retire early on an unreduced benefit at age 50 because of that reason. So very, very few members only a handful work into their fifties. So the key theme between these two provisions is to try to encourage people to voluntarily work to a later age than they otherwise would. So increasing the mandatory retirement age from 55 to 57 gives you a little more breathing room on that and it corresponds and aligns with a recommendation that was put forth in the law enforcement retirement benefit study group from a few years ago. And this increase of the max benefit cap you know, right now group C members every year of service they work their benefit multipliers two and a half percent and their max benefit cap is 50% of their average final compensation. So this means that if you have 20 years of service you hit your 50% of max benefit cap because 20 times 2.5% gets you to the 50. So if you keep working beyond age 50 when your first eligible for unreduced retirement your benefit only goes up through your salary growth beyond that point. This proposed change to allow people to increase their max benefit by one and a half percent for each extra year they work beyond age 50 allows the benefit of their accrual to continue at a slightly reduced level. And I see Eric's got his hand raised and I would certainly welcome him to jump in. Yeah, please do Eric. Yeah, Chris, I just wanted to address the mandatory retirement age around group C. It's something that I didn't necessarily appreciate fully but I know Dan spoke to this when we were endorsing the final recommendations that you know the idea of not forcing people to work longer. I think the way that we had talked about that recommendations the task force is that people could have the option to work till 57. I know there are a group there are a group of members who maybe began their career working at another law enforcement agency and then came to the state of Vermont and they do not qualify for the un-reduced early retirement because they don't have 20 years in. Right. But if the mandatory retirement age is 57 without a normal retirement age because right now they're late. Mandatory is 55 and that's irregardless of how many years of service you put in. So we need to make sure that when we codify this we're not creating a burden on some members that they would in fact have to work longer to not have their benefits reduced. That's an excellent point Eric. And to reiterate there's no element of this proposal that requires anybody to work longer or changes the existing ability to retire early with an un-reduced benefit at age 50 with at least 20 years of service. What this does is provide an avenue for people to continue working at a later age and they otherwise would without, you know, while being able to benefit a little bit on the pension side because the pensions save money by not having to pay that extra year of benefits out. If somebody voluntarily agrees to work an extra year. So I'm going to comment on the retirement age. I've been working on retirement committees and different things, law enforcement issues for a number of years and we've been scratching our heads trying to change that retirement age, mandatory retirement age from 55 and then it was just done with a snap of the finger by Dan. So I have a great deal of appreciation for that regardless of the impact on the pension system. I mean, in addition to the impact on the pension system. And I don't think there would be any adverse impact if normal retirement was kept at 55 for group C, but they, those members weren't forced to retire at that age. I think that would remedy the concern that I've heard from multiple group C members. Saying, well, make sure you understand that this would actually force me to work longer to have unreduced benefits. So we just need to be very conscious of that language in the ultimate bill. I look at it as similar to being social security kind of thing where you get a certain benefit if you retire at a certain age, but you don't have to. And the longer you delay payment, the more money you'll get in the end. Is it sort of the same, Chris? It's a similar construct where here we're not, this recommendation doesn't take anything away. This says if you want to work beyond age 50 that use it beyond age 50 or 20 years of service that your benefit would go up a little bit more as a result of your extra year of service. Yeah, okay. May I ask a question, Madam Chair? Yes. Okay, I know this is group, what's group A and B? There are legacy groups that are not open to active employees. There's one active member left in group A and they're certainly eligible for retirement. Group B was the former motor vehicle inspector group and that's a legacy group and they're not open to active members. Okay, so group A and B are either done or retired and not effective by this. Correct. So, okay, got it. Thank you. I was wondering where they were. Where are, got it. Thank you. This is actually, Chris, this is so nicely laid out. I just want to give you a kudo. I think you really did a great job on this. You really distilled it. I mean, there are some issues for those of us who are not financial whizzes but it really laid it out in good lay terms and made it comprehensible, which is useful. Thank you. No, thank you. And that's why we're here. So ask all the questions that you want. So the last thing I want to mention before I move on is and I want to take a moment to recognize the judiciary and Judge Greerson that the judiciary came to the table and participated in this process and they put forth recommendations as well. And you can see their recommendations here where they would have a slightly different exemption and they would exempt people who are within five years of retirement eligibility or have 15 plus years of service. But their recommendations are not, the group is so small that the recommendations are not going to move the needle very much financially but for equity reasons and parity reasons. What they put forth is pretty significant. So these recommendations in sort of layman's terms would bring the group D benefit a little bit more in alignment with some of the other groups' benefits. And some of those key areas are currently that the benefit for a group D members based on their one-year final salary at retirement, they recommend doing a two-year average of their final years, which is similar to what group C has. They have an average of the two highest consecutive years. Beginning in FY23, reducing the max benefit from 100% of final salary to 80% of the new AFC, you would have to have 30 years of service under their benefit to hit 100% of final salary. So again, this is not likely to move the needle tremendously financially but it's a big parity thing. Chris, is that 30 years of service as a judge or in the judiciary system? In group D. So who's in group D other than people who... It's pretty much all judges. But the key... But is it ever... Okay, sorry. Judges, there are 55 of them. Okay, so it's just judges. It's not people who work in the judiciary system with their VSEAA. No, no, they're group F. They're group F and state's attorneys are group what? I would have to look into that. If they work, if they're paid by the state, they're group F, if they're paid by the... It depends on what they are, but they are not group D. The only people in group D are the judges. Not even the magistrates, but the judges. Got it, okay, thanks. That's helpful. And something really important to keep in mind about group D is that we often think, we know many, many examples of sort of the rank and file employee that has 30 or more years of service. Group D members enter the workforce at a much later age than other groups. So, there's not too many that have 30 years of service in groups. I was gonna say, so, okay, I wanna ask. And then a couple other changes that they recommended for you, judges appointed or elected after this July would be to raise the retirement age from the current 62 to 65, putting a limit on the cost of living adjustments where the current formula, which is based on 100% of the CPI, would only apply to the first $75,000 of retirement benefit. That roughly corresponds to the average retirement benefit of a group D member. And then a reduced COLA that's calculated at 50% of CPI on benefit amounts above $75,000. And mirroring the other recommendations, they recommended delaying the current requirement where you must be in retirement for at least 12 months till you get your first COLA to 24 months. And can you just tell us the acronym AFC? Average Final Compensation. Oh, Average Final Comp, okay. Cause I was thinking salary and I don't see an S. Okay, I got it. All right, slide six, put some numbers around these changes based on the preliminary estimates we've done through the task force process. So, pretty conservatively across all the groups, we think that these changes would save about $8.8 million on the ADAC once they're fully rolled in and have a beneficial impact on the unfunded liability of about a little over $58 million of reductions. There's one aspect of here that the Group C COLA formula that 0% minimum, 4% maximum, the actuaries didn't specifically cost that out yet for Group C because they just weren't asked to earlier in the process. They did cost it out for Group F though, that will result in modest actuarial savings that are not accounted for in this table. But just due to the size of the group, that change is not gonna move the needle tremendously. And again, I put some asterisks and caveats around the Group D because we didn't specifically cost out the impact of those changes but I expect them to be pretty de minimis in the big picture because most of the current members would be exempt from the benefit changes. And this is not that many active members that would be paying higher employee contributions. So, slide seven walks through the impact of the additional state payments that are recommended. So part of the recommendations call for the state to make a one-time payment of $75 million in FY22 toward the unfunded liability. That results in savings in your ADEC payments that begin in a two-year lag. So that the impact of that $75 million basically would reduce the amount we would otherwise pay toward our unfunded liability by $7.3 million and have an immediate impact of reducing the unfunded liability by $75 million because it's fairly straightforward that you're making that one-time payment directly in. The recommendation also calls for making the state making an ADEC plus payment that would begin in FY24 and ramp up to a $15 million level by FY26 and remain at that level till the systems hit 90% funded. So in a way, as I mentioned earlier, you're basically redirecting a lot of that savings you see from the proposed benefit changes in this one-time contribution into making that plus payment in future years and just accelerating your payment toward paying down this debt. Another key element of the recommendations you'll see in both systems is currently there's a year-end construct where 50% of the unreserved general fund surplus goes to the state OPEB. Last year we had a pretty robust year-end general fund surplus. So $52 million through that construct went over to the state OPEB as a one-time payment which is gonna help us begin pre-funding. But going forward, the recommendation is to take that 50% construct and instead split it evenly into the pension systems. So 25% would go into the state pension, 25 into the teacher pension, again, to accelerate progress toward paying down the unfunded liabilities. Chris, Chris, you talk about a 75 million one-time payment. What about this $200 million that I've been hearing about? I'm gonna get to that in a few slides. Okay, thanks. All right. And sorry, one more question, Chris, before you leave this slide. Why do we wanna fund something only until it's 90% funded? Why don't we wanna fund it up to 100%? That is a great question. So systems very rarely stay at 100% funded for long. You will always have actuarial gains and losses from year to year that will cause a fund to slip above or below. 90% is well within the range of what folks who have testified before the committee consider to be a healthy system. 80% is usually a benchmark of a system that's in a relatively good shape. 90% is a manageable gap, if you will, for the state to close. And you may get to a point where if you have a really big economic downturn in the mid-2030s, you may need, and you're really well-funded otherwise, you may need to re-amortize your unfunded liability to make your payments more affordable. So 90% gets you to a very, very robust position, and it's a manageable expense. Because if you're in a situation where it's tied to 100% and the system might be 100.5% one year and drop down to 99 the next year, it's gonna be a constant yo-yo between when these payments kick in. So 90% I think was a threshold that a lot of people felt was a place where the systems would be in an extremely good financial. Thanks. Okay, that's a great question though. Slide eight just walks through the OPED proposal real quick. So building upon that $52.4 million payment that was made at the end of last year from the year-end general fund construct and begin pre-funding. And pre-funding basically would involve the legislature enacting a statute, a pre-funding statute similar to what we have with the pensions where it says, all right, your unfunded liability is gonna be paid off by this date, by this method. And you need to commit to making those payments in the future. The very act of doing the pre-funding schedule and enacting that into law and then begin it and having that disciplined approach to sticking with it allows us to see a tremendous reduction in our liabilities. And the reason why is because the GASV accounting rules require us to discount our liabilities using a 2.2% rate under PAYGO. That 2.2% rate is tied to the average of the 20 year double A municipal bond rate. So obviously what the feds are doing with interest rate policy and what the broader market conditions are can really drive that number in ways that are kind of beyond our control. But if we were pre-funding, we could discount our liabilities using the same 7% rate that the pension systems use because we would be investing money under a statutory construct where we are investing that money under an assumed rate of return of 7%. So the very act of changing that discount rate allows us to drop our unfunded liabilities on our balance sheet tremendously. But part of the recommendation also calls for the state to maintain the current PAYGO amount that we're already paying to OPEV. So generally the pre-funding, these numbers will fluctuate a little bit pending further actuarial analysis but generally the pre-funding would add an ongoing cost of 22 to 24 million above what we're currently doing under PAYGO. So again, this is where the savings we see from some of those pension changes would get reinvested into pre-funding the OPEV obligation. And slide nine, this is a few other points here where, and Eric mentioned this, but you're probably gonna see the statutory language show up in the BAA because that bill's moving faster than the pension bill will move. But there's gonna be some language that directs the treasurer and the visaers boards of trustees to work on some two issues and develop recommendations to the legislature by April 15th. One is what would that group G benefit look like for correction staff in a way that's actuarially neutral to the pension system and results in no additional employer pension costs? We did some preliminary exploration of this question where we asked the actuaries to say, what would it look like if we created a new group G that looks just like the current group C for law enforcement? And the number they came back with was at a rate in excess of 35% of payroll. So that would just be unaffordable for people. So I think where folks left this was, it's important to study the issue and provide some recommendations. You need a little more time to do it. And I know the treasurer is working with the employee groups on this process as we speak. The other one is around this idea of a longevity incentive that Eric mentioned. We cost it out a few things during the task force, some ideas about encouraging people to work a little bit longer past the point at which they're eligible for retirement. But this could either end up adding costs or saving costs. It all depends on how behavior is likely to change. And the reason why this is a little more complicated for group F than for group C, the law enforcement is right now, almost everybody retires at age 50 if they have 20 years of service with the law enforcement. So the actuaries don't assume a whole lot of extra, people working into their fifties. So it's much more straightforward that the more you can encourage that behavior, the more likely you are to see savings. It's a different case with group F. I think we can all think of state employees that could retire and have had that ability to retire for some time, but they continue to work out of dedication, out of the goodness of their heart, out of whatever personal reason causes them to keep working. And the actuaries assume that some percentage of people in group F are gonna keep working past the point at which they can retire on reduced benefit. So we need to really understand how much behavior is likely going to change above what we're currently assuming, because otherwise, if behavior doesn't change, the incentive could just work as a benefit enhancement to the people who are already assumed to retire. So that's why this requires a little bit more further study. So here's some very, very preliminary. Yep, yes, Sam. So Chris. Sam, I'm sorry.  Allison's fine. Bob, I guess the question is, I know we have identified this for further study. What's our timeframe on that? So the recommendation is that we would ask the treasurer and the Board of Trustees to get back to the legislature by April 15th. And the intent would be there. Oh, I just missed it. Oh, there it is by the 15th time. Yeah, and the intent behind that is, yeah, the intent behind that is to give the legislature the ability that once they receive these recommendations and if they deem them acceptable, that they could drop them into the broader retirement bill that contains all of these other proposed changes. Right. And that would just go through regular GovOps committees rather than going back to the task force. Correct. I believe so. Yes, could because the task force has agreed to that as a condition. Got it. Thanks. Okay. Slide 10 just shows some preliminary cost estimates and this gets back to Senator Collamore's question earlier about the $2 billion. You could see her on the right that the pension benefit recommendations that I previously ran through conservatively would drop that unfunded liability by about $58 million. That one-time pension contribution is another $75 million. Pre-funding OPEB, huge, huge impact, $891 million impact on reducing our unfunded liabilities due to the ability to use that higher discount rate when doing our math. Yeah. But these charts are going to be updated, I'm sure, through the legislative process. I know the treasurer is going to be working with us and with the actuaries to take these recommendations and as the language gets a little more refined seeing to what extent the numbers would change for FY23 and the future years. But this just gives you a sense of the magnitude of some of the different changes. And I'm not going to spend a lot of time on this because the numbers are preliminary, but I wanted to give you a sense of scope. And if you have any questions about this, happy to answer them offline or dig into further details. But you are going to see more numbers and you're going to know what to do with. But by the time this bill makes its way through the legislative process, but these are the preliminary estimates. As you, Senator Kitchell joined us and has her hand raised. I do, and I don't think I'm muted. Lower my hand. I wanted to go back and just respond to Senator Polina's question. I was asked to get involved in this discussion toward the end. So I have the benefit of all the work of the task force. But I would want to call your attention. The 200 million is what we're committing for one time for pensions. And you're asking, well, how come it's only 75? When we were building the budget last year, your appropriations committee, we're really trying to position ourselves to deal with both the unfunded liability for pensions as well as healthcare benefits. That's why we had the construct that at the end of the year surplus for state employees, healthcare, that half of that surplus would go there. And that is where we were able to get that 52.4 million. So when we were looking at the two systems from a fiscal perspective, looking at that economic security, there were two pieces. One is the underfunding of the pension. And the second was the underfunding of the healthcare benefit for retired teachers. And that's where you had great divergence. The state employees had a much higher underfunding of the healthcare benefit, but less on the pension side. On the other hand, teachers were just the reverse. And so when we were looking at one time money, we put in, we had the 52.4 that we were putting toward the state employee's healthcare. And then we had the 150 million held in reserve. We split that 50-50. And then we added another 50 to go on the teacher's retirement side, simply because the underfunding of their pension system was almost $2 billion versus just a little over $1 billion for state employees. So the reason we allocated it that way, but in the end between the cost of the retiree healthcare benefit and what we put into pensions came out very close to being equal. So I just wanna say that the money was very consciously, the one times done that way, recognizing the different underfunding conditions for the two different groups. And so that's why we wanted to look at both, although the task force focus originally was on pensions, it moved in the end toward the economic security and the two important components. And that is, and the representatives told us this, security around that healthcare coverage is really important. And that underfunding was at risk. So if there's one thing, I don't think that people necessarily thought about when we started this, but for state employees, the pension underfunding was a little over $1 billion, but the underfunding of the healthcare benefit was almost $1.7 billion. So that's why from a fiscal and a budgetary perspective, we allocated the one time of that 200 differently but we then had the other 52.4 from the surplus that we had parked because we knew we needed to start a strategy for state employees' healthcare. In addition, for members of the Senate, you were recognized and it was a topic that we just left at the end of the year, we had recommended that we start pre-funding teachers' healthcare benefit out of the ed fund for currently employed teachers, not retired. And that's really important for teachers who are working right now who will be getting that healthcare benefit. That was, I think, about 13.9 million. We couldn't get agreement at the end, so we reserved that. So I think it's important to understand so much of what we did last year to have these dollars and reserve to help us put together a package that addressed both elements of our economic security for retirees. So I just wanna state that that's why when we're talking about the 200, there will be an additional 50. It'll be directed to where the underfunding of the pension is greater, but then we had the one time at the end of this year, this past fiscal year, that was 52 million that was directed towards state employees, healthcare underfunding. So I encourage everybody to look at it kind of in the aggregate because it was designed to recognize the difference of where the risk was the greatest between the two groups and to direct the funding. The other thing that I would say in looking at it was very common, it was very powerful and that is if we increase our contributions, we want an affirmation that in fact, there will be a plan to root in an ongoing basis by down the underfunding. And both groups said we want the normal ADEC, but we also want something added to that. And so that's where we came up with the additional 15 million that would go with the ADEC. And just to give you some idea, the normal ADEC for state employees is about 36 million according to Treasurer Pierce's latest letter. So 15 million against that is a fairly significant supplement that will go on an ongoing basis. The way we fund this, and that's why I get back to Senator White's comment is this is so all intertwined. And that is by making one-time payments toward the pensions two years out, we will see a reduction in the amount of the ADEC that goes to paying the amortized under liability payment. And we would be putting a fence around those freed up dollars to say we're keeping them within the system, we're directing it to fund that ADEC plus, the plus on the ADEC. So that's why when we got into the money to put this all together, it gets rather complicated, but it gave us an opportunity to put our fiscal house in order. And I just wanna restate between the collectively, we will have had over a $2 billion impact on reducing the underfunded liability carried on the state's books, which if anything should impress Wall Street, I would think that that would go. But more importantly, it really shores up and stabilizes and starts paying for the first time ever. And it does require more money on the state side. I'm not denying that because we've never pre-funded that healthcare benefit and we are paying it pre-go dollar for dollar, having no benefit of compounding return on investments and it is creating a tremendous pressure on the general fund. And what we have for funding available to fund other programs, services and benefits. So I just wanna state why that $200 million ended up allocated the way it did because I think that's really important, but also you can't look at that in isolation with the other money that got reserved and where that was directed. So in the end, the two packages were very, very close around 150 million each. So I'm going to jump in here and I'm going to make one suggestion that we not get so tied up with any one number and any one amount that we start picking at it because as Jane said, it could very, very, very easily start to unravel the entire thing. And then what I'm going to do now is I'm going to interrupt you, Chris, for just a moment here. I see Eric has his hand up, but I want to acknowledge that Andrew and Molly have joined us and Andrew and Molly, I'm gonna have the committee introduce themselves to you and then you can take it. And we have heard from Dan and Leona and Kate and Dan. And Eric and Eric, Dan, Dan, Leona, and Kate and Eric and Eric is still with us. So, but so I'm going to have the committee and I want to interrupt us here for a while and do this because I know you're jumping away from your kindergarten kids that you're hurting and your fourth graders. So we were, yes. I'm just wondering perhaps sort of since I've explained from our fiscal and budgetary perspective sort of what we've done, is it all right for me to sign off? No. No? Yes, thank you, Jane. Although I want to say working with all the people that are out there from both unions, it really was a very constructive and I thought it was a very positive way of working together to get to what we have as an agreement here. And so, as someone who only got dumped in it toward the end, it just, it was, I found it just a real pleasure. So I just want to recognize the fact that our discussions were very constructive and very positive and that's obviously a tribute to the people that were negotiating. So I just wanted to acknowledge their hard work as well. And thank you. Yeah, I just want to say thank you to you too. I just, before you hop off, I just want to say thank you so much because it may not be Senate and House language, but fourth graders would say back atcha. And Andrew, what would the kindergarten kids say? We don't want to hear. We're big on the connection sign, so or like me too, but we would do that. Okay, thank you, Jane. Yeah, thank you. Have a great weekend, everyone. Thanks you too. So I'm going to have the committee introduce themselves.  So committee. I'm Anthony Polina, represent Washington County. Ryan Colomore, representing the Rutland County District. Allison Clarkson, Windsor County District. Lisa Rom-Hinsdale, Chittenden County. So Andrew and Molly, if you would like to just introduce yourselves and we heard from, as I said, before we heard from the other members and they just talked a little bit about how they came to this and to whatever you'd like to tell us. So do either of you have a time constraint right now? No. Okay, so Molly, do you? No, kids are at PE and she's going to dismiss for me. Okay, great. Okay, so I'll let whoever wants to start. Okay. You go for her, Molly, you were here first. Sure. Anthony is in gym. Sorry. There's never a moment where you aren't interrupted in the classroom. That's the defining characteristic. So my name is Molly Stoner. I teach fourth grade down in Dumberston, just south of Jeanette White. And so we were able to carpool up to Montpelier a lot during the legislative task force, which was a savings to the environment. Let's see, what brought me to this? Well, I'm passionate about my career, my profession. I'm passionate about everything that was involved in this, I guess. And it was a really incredible learning experience for me and a really wonderful thing to be a part of. I'm really, really glad I did it despite how exhausting it was. Really good to use different parts of my brain. Last spring when the first and second suggestions came out, I was five years and two months from my retirement age. So you might imagine that that five year piece and the potential of working another 10 years really was a trigger for me. So if I hadn't been motivated without that, I certainly was by that. And I just started learning a lot and running a lot in numbers. I'm kind of a mathematician in my own space. And so I ran a lot of Excel spreadsheets and looked at what outcomes would be for my own pension in different scenarios and started organizing locally where I had been union vice, where I was at the time actually, union vice president and just started basically being an educator for my colleagues more than an organizer at first. I really was helping people understand what the changes would mean for them and that sort of thing. And started working at the state level with Vermont NEA to get, you know, do some communications around the changes that were being proposed. And then when the NEA was looking for people to continue to serve, I considered it. I was feeling really exhausted at the end of the school year and decided to push through that exhaustion. And like I said, I'm just really glad that I did. It was a pretty amazing experience to work with 13 different people coming from really different perspectives and to be able to hear those different perspectives and really come to understand the problem more fully and be able to then turn around and communicate that sort of broader understanding of the problem to my colleagues too, who might have been thinking as I was originally more simplistically about underfunding and challenges in Wall Street, but then to also start talking to people about demographic changes and overall needs of the state and all the things that we heard from other members of the task force. Yeah, and so I guess I'm not sure what else I would say, except that I think that the agreement we came to is one that is something I can really stand behind and really encourage my colleagues to stand behind. And honestly, I think that we've done a lot of good work in that regard in Vermont NEA and it feels like people are understanding this agreement and are feeling willing and I'm not gonna quite say eager, but willing to pay the additional contributions to help strengthen the fund for the future and to take the offset COLA as well. So I really appreciate the cooperation and listening in the other members of the task force and I feel good about what I was able to offer as well. Can't get better than that. Thank you. So we'll go to Andrew and then if anybody has any questions, we did that before. If anybody has any questions for you, you can answer them if you want. If you don't want to, you don't have to. So Andrew. Hi everybody, my name is Andrew Emerich. I'm a kindergarten teacher at Brookside Primary School of Waterbury, my 11th year teaching. Similar to Molly, I get involved last spring when I was hearing about the proposals from Treasurer Pierce and then also the proposal that came out of the house. I began by testifying in the public hearings last year. Really I wanted to be a voice for my fellow educators, especially some people who are new to education, getting into a field that's really challenging where they're still trying to get their footing and they were just exhausted and I had some extra mental capacity to look at the pension issues more carefully and kind of similar to Molly, help educate them on those pieces and also be a voice for those people. As we move forward, Vermont NEA put together their task force and I was very interested in joining that, knowing that there would be a large representation of educators from across the state and I thought it would be important to be on there as well. So I really thought this was a great process to go through, it was long and we had lots of challenging discussions throughout. They weren't always easy, but I appreciated the thoughtfulness and respect that everybody brought forth to each meeting. Our recommendations that we ended up presenting on Monday, I was pleased to see those go through with unanimous support by all 12 voting members of the task force. It's a big commitment that the state is making to shore up our pension system and I heard representative Kitchell speaking about the importance of shoring up the OPED by moving to a pre-funding structure instead of pay go and I think that's also a crucial aspect of this so that five, 10 years down the road, we're not back to the table having to address that OPED piece for healthcare retirement benefit. I'm a big supporter of everything that we put out there but it's not gonna be easy for all of our colleagues. There are educators, there are many of us who are living paycheck to paycheck and I'm having to contribute even a little bit more, we'll be challenging for them. So I was glad to see that we could have that progressive structure in our contribution rates and also the gradual phase in over three years that we were to have just bumped this up in one year that would have been a really big hit that would not have given anybody a chance to prepare for that financially. So I was pleased to see that we could work on that as well. Yeah, I'm really looking forward to continuing this work. I know our recommendations are just kind of one endpoint continuing on to the next phase. So I'm glad to have the opportunity when Senator White invited us to join today to come and speak to you all and I'm happy to answer any questions. I know that Chris is here also and he's fantastic with all the extra details and numbers and was essential to this process. Yes, Chris became an honorary member. He was with us every step of the way. It was certainly an honor, Madam Chair. It was certainly an honor, Madam Chair. So does anybody have any questions for either Andrew or Molly? No. Thank you so much and you're welcome to stay with us as long as you want. I know Eric has hung around and you are welcome to stay with us. If you, I will remind you that we don't use chat. I saw Molly just sent me a chat, but that's okay because I didn't remind us earlier. I usually do.  Yeah, I mean, we asked some questions of your colleagues earlier. So, but I guess I'd like to ask each of you how you're involved in the educational rollout to your members of this because we heard about the face, we heard both from Kate and from Leona and Eric about their engagement in helping educate the members. And it sounds like Molly, you're continuing to be involved. I just would like to ask you both how that's going and how you're involved. Yeah, sure. So, Vermont NEA has a task force that includes, actually Andrew, can you take it first? I got to turn off my walkie talkie or it's going to interrupt us the whole time. Yeah. Yeah, I'm happy to. Just a little bit about that. We heard about the group that's been working. Yeah, that's been one kind of instrumental part throughout this process. And I know that the task force will continue, Molly, Kate and I will continue to inform them and help them to understand all the details from Molly, Kate and I being at the table from nine to four every time in session. I think we've really got a good grasp on this. And our colleagues who have been teaching during those days haven't been able to see every single moment that we have. So we're continuing to help educate them so that they can go out and speak to their members as well. We'll be having a pension town hall for our Vermont NEA membership on the, I believe it's Monday the 24th to continue to help roll that information piece out there. In addition to serving on the task force, the internal task force of Vermont NEA, I'm also a member of the Vermont NEA Board of Directors. So I've been in communication with the Board of Directors, which really controls the operations of the Vermont NEA and is composed of educators from across the state. So I've been helping to present them with information that then they're also taking back to their membership and presenting. So there's really lots of different people that are out there getting this information and continuing to spread it to membership. As far as the social media piece, I'm not a big fan personally of engaging on social media with comments. I feel like often it's the local minority that posts their thoughts on there and it's not a representative representation of the whole community that we represent. So I will continue to not only work with the Vermont NEA Board of Directors in the internal task force, but also my local association, which is the Heartwood Unified Education Association. Thank you. Thank you. And I work on the local, the Vermont NEA at the local level too. So I'm taking the information from the state to the local in Windham Southeast. And then one of the things that I've been doing as well is connecting with a colleague each in Windham Northeast. And it's not called Windham Central anymore. Is it called the river? It's the West River Valley. Yeah. It changed the name. Yeah. And so I've been connecting with them because they haven't had members on the state task force. And it really is quite amazing like how hard it is to get that information out. We had a staff meeting at my school. And of course I'm a rep and everyone knows that. And Wednesday afternoon, we had a staff meeting and I said, referred to something. It was two things that were quite sad news. And I said at the end, something like, well, there was an agreement on the pension and even people in my own school were like, wait, what? Really? And I was like, okay, yeah, let's talk on the hall out here. You know, so it does really take that pounding the pavement, I think. And that's what we're gonna be doing as Andrew was describing. I do engage a little bit on Facebook. What I do on the Facebook group is that I usually post information that's been put out by NEA or something that I've put out in my district if it's with my district. I also called two people directly the other day that I saw engaging in Facebook that are in my district and who I know. And I said, hey, let's talk because you're on Facebook talking about it. So let's talk about what's real and had great conversations. And that was really grounding. So I do plan to continue to do that because I think sometimes people just get in a role and need a little like, hey, let's ground ourselves here. Yeah, wow, how wonderful. I wish we had that nationally on every issue. I'm not volunteering. And we will continue to educate the other 175 of our colleagues who are not on the task force because we have some educating to do also. Yeah, which we've begun, but it'll be an ongoing process. So yeah, Molly. Well, and I just wanted to say if there are ways that you can call on us to help with that as well, we can help in educating your colleagues as well in terms of being constituents of them across the state. So please, let us know if there are ways that we can activate members that we haven't been thinking of ourselves. So that's perfect. That's an offer because I know at least before the report came out, I'd had a couple of teacher groups saying, oh, we wanna meet with you, we wanna meet with you. And it's much better to meet with you actually that if there are enough of them that make it worth your time to talk to them. Yep. Well, I think that Molly also offered not just to meet with teacher groups, but to have their members meet with their own legislators to work with them so that they are convinced that this is a good package. That's what I understood you to say, Molly. Yeah, I was thinking of like legislative breakfast that have sometimes happened in Wyndham Southeast anyway, you know, in our area and local groups might be able to meet with legislators and teachers could join in those meetings. Yep. Good idea. Thank you. We'll have individual meetings. You're very busy people. Thank you. So you're welcome to stay with us. And what we're doing is Chris is walking us through a slide, a little slideshow here. And it isn't his vacation slideshows as you can probably imagine, but I did and we are going to be joined by Beth at three. So I wanna figure out how best to handle this. And I did see that right before we went to Andrew and Molly that Eric had his hand up. So Eric, did you still have a question? If he's still there. Madam Chair, no, my hand was up in error. I apologize. Okay, no, no, no, that's just fine. I just wanted to make sure. So Chris. Well, Madam Chair, in the interest of time, I've got about four slides that sum up the teacher proposal. Perhaps we can run through those and then turn it over to the treasurer when she joins. Okay, perfect. Cool, all right. Hopefully you all can see that slide. So there's a lot less to explain with the teacher recommendations because there's fewer employee groups to make differentiations around, but you'll see that a lot of the recommendations hit on similar themes to what you saw for the state employees. So again, no changes to currently retired or terminated vested members, phased in higher employee contribution rates in a progressive manner, relatively modest changes to the COLA benefit, but one time payment here is 125 million. So back to Senator Polina's question earlier and building off of what Senator Kitchell mentioned earlier, this 125 comprises of the other 75 million half of the 150 that you all reserved in FY 21, plus an additional 50 million that is proposed to be reserved in FY 22. So it's 150 from last year plus 50 from this year gets you to the 200 total of one time money. And that 200 total is then split 75, 125. Exact same construct around the ADEC plus commitment and pre-funding OPEB, but in a slightly different way. So the state employee OPEB costs are paid by all the funds of state government in proportion to their share of the active payroll. The proposal that's being recommended here would be to pre-fund the teacher OPEB in the same way we pay the teacher pension costs, where the normal cost of the benefit is paid out of the ED fund and the pay go cost of providing the benefits to today's retirees and amortizing the unfunded liability rests in the general fund. And again, this was something that came up as Senator Kitchell mentioned at the tail end of the budget process last year and the rationale behind putting the normal cost in the ED fund is that the normal cost represents a cost of compensating today's workers with a future retirement benefit. So slide 12 here just shows real quickly that the proposed contribution rates, the recommendation involved a marginal structure that looks like income taxes phased in over a three year period. So again, this does not mean that if you are a member that makes $65,000 that you would pay 7.5% on every dollar of your income. This is like an income tax where you have an effective rate that's based on how your income falls within the different brackets. And similar case here where the revenue generated from higher employee contributions offsets the normal cost. So in simplistic terms, you can think that every dollar that would be generated from the higher employee contributions is a saved dollar to the ED fund because that's where we pay that normal cost out of on the employer side. Slide 13, very similar cola changes to what you saw on an earlier slide in the VSRS recommendations where the current 1% minimum, 5% maximums proposed to be changed to zero and four and extending the current 12 month minimum of retirement in order to get your first cola to 24 months. Again, exempting actives who are eligible for normal, unreduced retirement as of July 1st from those changes. But one key difference here is that the teacher cola is based on a different formula than the state employee cola. We say the state employees have full cola. Their cola is calculated on 100% of the CPI. The teachers, it's calculated on a 50% of the CPI basis. So one element of the recommendations is that once the funds reach 80% funded that formula starts to go up in an incremental fashion by 7.5% a year. So you would go from 50% of CPI to 57.5% of CPI and so on and so forth. So long as doing so would not cause the fund to drop below 80% funded. If that happens, if that's projected to happen, the formula would just stay where it was at the time and then the calculation would be revisited in the next year. But overall, we're looking at at least $4.8 million of ADAC savings and about 35 million in unfunded liability savings. Again, the reason why the numbers don't move quite as far with these cola changes for the teachers as they do for the state employees on a previous slide, because the state employees have a more generous cola benefit right now. So when you make changes on the state side, it yields more savings. Slide 12 shows the impact of the proposed additional employer contributions. You can see that that $125 million total, if you pay that in a $5.22, you see some savings beginning in a $5.24 of about $12.2 million and those savings recur in future years and that immediate savings of 125 million on the unfunded liability. Same construct here where that plus payment would fully ramp up by FY26 at $15 million and stay in place till 90% funded. And again, that year-end general fund construct would be reconfigured consistent with what you saw on a previous slide for the state employees. The OPEB proposal is a little different, but again, the same theme is the recommendation is that you fund this according to an ADAC strategy, the way you do with the pensions. But with this proposal, the recommendation calls for putting $13.3 million from the ED fund that's currently reserved from the budget negotiations last year. Move that over to the teacher OPEB trust to begin pre-funding. So in order to help hedge against short-term volatility in investment performance or claims experience and costs, it's a good idea to start with a little chunk of money and then begin your pre-funding. The state employees got that chunk of money in the year-end construct last year. Here we need the recommendation calls for using 13.3 million of the currently reserved 14 million in the ED fund to begin the pre-funding. Then moving forward, funding that normal cost out of the ED fund. So that starts at 15.1 million in FY23 and will increase with payroll as you go beyond that. And then apply the current pay-go amounts out of the general fund to pre-fund OPEB. So that way we're sort of mirroring the construct that we have in place for the pension systems. Slide 16, again, similar chart that just shows you the relative impact of the different savings and these are very preliminary numbers pending actuarial review and some timing constraints. But the really exciting thing in this box is what you see on the right here, where you see that 34.9 million of unfunded liability savings from those pension recommendations. Another 125 million dollars of savings from that one-time payment recommended to be made by the state. Pre-funding OPEB, again, huge, huge, huge impact, $837 million reduction in that unfunded liability. So you get to just under a billion of unfunded liability impact from this proposal. You add that to the just over one billion for the state employees and you're at a little over $2 billion total. The final chart here on slide 17 just tries to some impact up by fund for both charts. Again, for both systems, again, I'm not gonna spend a lot of time on this because the numbers are so preliminary at this stage, but I just wanted to give you a sense of how things are likely to shake out in terms of the impact to the different funds. And again, we need the actuaries to do some number crunching to confirm exactly what year we'll see which savings. But based on these numbers are based on the projections and the preliminary estimates that the task force has received up to this point. And with that, that is the quick and dirty overview of the summary of the recommendations and some dollar estimates attached to it. And I know the treasurer has joined us and I'm happy to answer any questions you have or sit tight in the background. So, yeah, Senator Polina. I appreciate this is a lot to digest, believe me. I have a question, maybe simple may not be, but we're talking about pre-funding the healthcare. I understand that the money is gonna come out of the education fund. Does that just mean it's more money out of the education fund? There's no money going into the education fund directly to do that, right? Is this an out of expense? That's a great question. Some of that higher cost would be offset by the pension savings. So higher teacher pension contributions offset the normal cost to the pension to the ed fund. Some of the changes to the COLA that would reduce the normal cost also result in some savings to the ed fund. So things do not perfectly counter each other out but it's down to within like single digit millions of cost. So we're essentially making, we're doing cost savings, which is gonna allow us to add to funding for the healthcare. That's basically it. Yeah, we're basically trying to find savings in one bucket to offset the fiscal impact of the higher costs for the OPEB and for the plus payments. Cause I could see people being sensitive about it and saying, well, there's more money coming out of the ed fund. Where's this, how are we paying for this? So I like your explanation. It makes sense. Thanks. And one important thing that Senator Kitchell mentioned and I would reiterate is, the normal cost is a cost of compensating today's teachers. This is not a cost that represents any sort of bad decision in the past or an investment loss in the past. The normal cost is what you should be setting aside every year over the course of an active member's employment to make sure that you've got enough money to fund their retirement benefits when they retire. And if I can just say this, that this package as it has been presented has the blessing of the chair of House Ways and Means who is a fierce protector of the education fund. So I just wanted to throw that out. I also wanted to respond a little bit too and then we'll go to Beth from Senator Clark, Senator Coulomore's question about when you said $2 billion and he said, yeah and it didn't ever Dirksen once say a billion here, a billion there and pretty soon you're talking about real money, yeah. I've heard Tom Kovet say a trillion here, a trillion there, given the way Washington has been doling out money lately. I prefer Everett Dirksen's and I love Rockefeller's early one in Standard Oil in the 1920s or something else like what's a million dollars? Well, probably the equivalent now of a trillion. Could we take a break before the State Treasurer? Yes. Even I was going to suggest that Senator Coulomore, I can't believe it. So Beth, does that meet with your, is that okay with you if we take a five minute break? She said absolutely. I couldn't hear it but I could read her lips. Okay, thank you. And everybody, so we're going off you.


How's it going guys my name is DPJ and if you enjoy your stay here and would like to show your support hit that like button truly helps out and subscribe if you like what you see and want to see more. So with DLC4 there are 15 new legendos and today I will showcase the weapons and items including shields and class mods and the bosses they drop from. Time stamps for individual legendos can be found within that video description and pinned to the top of those comments and I really do hope this video helps you people out. Ok so first up we have legendos from Castle Crimson and firstly we have the pat or pat mark 3 plus which drops from sponge boss. Next up we have the lovable rogue, the septum air prime and the flare class mod. These drop from evil brook and evil mordecai. Brook with their lovable rogue and mordecai with the septum air prime and the flare class mod. Next up here within castle crimson we have evil lilyph she offers the muse class mod, the prompt critical pistol and the blood starved beast smg which is one of the best weapons this DLC offers. Ok so now we move on to sapphire's run and the low comorbius which is the boss of this area. This train offers the blind sage, the faulty star and the hoster class mod. Ok so on to benediction of pain with dr benedict. He offers the convergence, the peregrine class mod and the plus ultra shield. Ok so last up we have the psycho lever who is the last boss and he is located on vault hella. He drops the major kong and the rebound. And people there we have it, the complete DLC for legendary guide and I hope this video helps you out. If it did leave you a like helps me out, if you're new around here and want to see more BR3 be sure to subscribe and if you never want to miss a video upload you can turn notifications on by hitting that bell button but guys thanks as always for stopping by, hopefully you enjoyed the video and hopefully I will see you on that next one.