our folks in. Good morning. You are back with the Vermont House Government Operations Committee. We are meeting this morning with all of the folks who have taken a look at a governance proposal that we put on the table yesterday. I think it's helpful to frame up why it is that we are concerned about the role that that governance plays in the situation that we're in is really about looking at sort of all of the assumptions and predictions that have been made over the last 10 years and recognizing that in the vast majority of cases we were wrong about those assumptions and predictions that we made about the pension system. That has contributed to the legislature being handed a bill for the ADEC payment that is both ballooning and unpredictable and frankly unsustainable. And so we do want to make sure that we are looking at all of the potential solutions to this and the speaker has been very clear that this is a priority for her and that she wants to put a fair amount of one-time money into helping to fix the problem and from my perspective as chair of the government operations committee sort of on behalf of the legislature and taxpayers of Vermont, I don't want to be in a position where we squander the opportunity that this $150 million has for us to put our pensions on a path towards sustainability. And so I don't want to leave any stone unturned in terms of trying to figure out if we can do better going forward on behalf of our public employees. And so we're going to spend some time here this morning with the folks we have in the room with us and we will come back to this right after judicial retention if we have time between then and noon. So I think what I'd like to do is ask each of the folks who are with us today to talk for, I don't know, try to talk for maybe 10 minutes or so, leave some time for some questions so that hopefully we can get through each of the witnesses who's with us today. And just for fun, I think I'm going to start at the bottom of the list as it appears in front of me and ask Tom Galanca who is currently the chair of VPIC to share any perspectives that you might have. Tom, thank you for being with us this morning. Okay, thank you, Madam Chair. I appreciate the opportunity to talk to you here. And I know I've voiced some initial concerns that I'll be happy to write down in terms of specific structures on governance. But I want to talk about sort of overall strategies and overall mission of VPIC and answer any questions in regards to, obviously since I took over in January of 2016, I understand that there's been significant issues prior to 2016. And I'm the first one to acknowledge that if we were still in the 95th percentile of performance versus our peers, the first thing you should do is get rid of VPIC. I want to argue today, though, or at least try to convince you today, some of the progress that we have made over the past four years and the significant benefit of those changes and a radical departure from the existing structure would considerably change that dynamic. And I want to have the committee understand that. I first want to start off by saying I agree with all of the objectives listed in your proposal. Increasing the level of professional expertise is something that we're challenged with every day in the committee. I think mandating it and requiring the underlying boards to view it as a priority would be particularly helpful. In the past, they've consulted with me in regards to members that come to the board. But this is Vermont and it's difficult to get a lot of volunteers in this space. In addition, investment professionals in Vermont in particular may be prohibited from participating in boards of this nature due to compliance concerns. I know when I originally joined this board, there was a significant issue of getting prior approval from our broker dealer to even be able to participate. So I think making hoops or mandating that is going to be rather challenging. I think it's a good goal and I think working with the committees to add that as a significant objective is quite significant. Maintain the representation and participation I think is key. Looking over this proposal and my roots come from the Vemur side. I was the Vemur's rep appointed through Governor Douglas. I was a city council member for 12 years and I know the importance of Vemur's representation on this board. They have about a billion dollars of this trust invested in it and I think it's a significant concern if radical changes happen amongst the Vemur's plan and as a member, a former member of Vemur's, I would be extremely concerned on that without having a thorough review of what the impacts would be. Streamline decision-making process I think is always the best practice and I would strongly encourage that. Require more frequent experience studies and enhance transparency around investment fees. I totally agree with that and that's part of the process that we have tried to undertake since 2016. I want to get to the numbers and I want to talk about those numbers and really understand the dynamics that were happening last June. We were two months into a pandemic so there's three things that I think conflate this issue and bring it to a head right now. Just as you shouldn't use today's numbers where we're showing up fiscal year 15%, I think you really have to look at last June for the three things that are really combining to making the negative numbers look relatively poor and I think a longer-term perspective I think is more appropriate. One, COVID. The markets were down 30% in February. VPIC was only down 10% and part of the worst of it, that was at the end of March. We recovered all of that by June so you're showing a flat rate of return but think of your old 401ks and your old portfolios. That's a testament to what VPIC did last year. If we can avoid the losses, we can have significant benefits on the upside and the second thing is smoothing. Smoothing is a lagging indicator and it's an indicator of years gone by and so you're still having impacts prior to my tenure but I think VPIC is being judged on. I would suggest in the future that smoothing really be looked at as one context but it just hides the reality of where you really are in terms of fiscal position. Making decisions on the fly using a smoothing methodology I think limits your approach. The third decision is our fiduciary decision. The third thing that I think need to be considered is our fiduciary decision to reduce the rate of return which I believe has nothing to do with politics and it has nothing to do with past performance. It has everything to do with future potential. All those three kind of combined to make the actual numbers from last fiscal year look weaker than if you were to look at it today and if you look at your documents that I submitted today you will actually see the investment performance numbers from December of this year which actually gives you a really good track record for my tenure. I started in January 2016 and since that time if you pull up the investment performance and in looking at it today and I'll do that right now the five-year number that we've annualized since beginning this process as of the end of the year was closer to 9.8 percent and if you look in that performance report that's in the top 19 percentile of a peer review of one to ten billion dollars. If you further that out our seven-year number is now over the seven percent it's at 7.17 percent it's in the 34th percentile of peer review and if you look at the 10-year it's still in the 69th percentile but showing about 7.24 percent. I don't want to belabor the issue in regards to performance but I think it it bears repeating that investment performance is important but you have to look at it what's happening today and what we've done since 2016. You know since 2016 we have had a laser focused strategy in regards to lowering costs. If you look at the other document that I included on there it's the way VPIC looks at fees and looks at how we manage our managers and whether or not there's incremental benefit to having an active manager versus a passive approach. I heard questions on on indexing we've done all that we've indexed three billion dollars or so of the trust into different indexes so every time a manager comes in we're looking to see where that brings incremental value and I think it's showing results and and I'm proud of those results for the past five years. I am concerned if you throw out VPIC what does that transition look like and the governance proposal that I see is that you're starting from scratch. We've built relationships with all of our managers. We have contracts in place. We have board seats on ESG initiatives. We've we've managed through a divestment issue that came about through legislative changes. There's a lot of different moving parts in VPIC that I think need to be addressed. This past Tuesday VPIC had a meeting and as an extension of our fiduciary meeting which we had in December where we brought in an expert from Aeon to give us a morning a three and a half hour fiduciary talk to our committee members one of the recommendations was to do a governance study. We didn't do it at that time because of the cost and we figured we'd be a little bit more fiscally prudent and stage these out so we weren't bombarding our members but at this past Tuesday meeting we recommended that we perform that study and have something that could be available in a relatively short amount of time you know possibly over the summer as early as that. In addition I spoke yesterday with our chief investment consultant at RVK which is Jim Voiko who's a world renowned expert in structure and plan design as well as governance and he has offered his availability to testify in front of this committee to answer best practice approach to governance and I would hate to see this committee make recommendations without at least hearing from RVK, hearing from a governance study that VPIC is willing to perform and to understand what the unintended consequences of moving away from the current structure would entail. So with that I don't want to go over all the materials I included with you but they include the fees they include how we review those fees they include the current investment performance and if we're going to throw VPIC out I really want to have a thorough review of what we have done since 2016 and it's been drastic and I think it's it's significantly improved where we are today where we'll be in the future and if you look at it and I'd also say quite frankly the three investment staff that work for the treasurer's office are probably the three most valuable staff members you have in state government and they're tirelessly working both for for for Beth in regards to investments but they also do a lot of other things in regards to the 457 plan as well as ESG initiatives and I know they've come a long way in regards to professionalism and I'd like to see that continue I'm always willing and open to change but I'm quite excited about where we are today so it's it's frustrating to see us being judged on a lagged stream or lagged actuarial number that has no basis in reality going forward so with that I thank you for your time and I'll answer any questions questions from committee members John cannon Tom thank you for testifying this morning and thank you for your leadership on VPIC and you know I have looked at the investment performance numbers and they are dramatically improved there's no question about that however we had a long period of time where that was not the case and my concern is you know your leadership I think has been there as result in these changes but there's been no structural change to ensure that if you were to get run over by a bus tomorrow that this good performance would continue and so I'm just if you could just address that I mean and why we had such a long history of poor performance and missing our investment assumptions you know it's a great question it's difficult to get volunteers for a position of this magnitude and it's a very complicated issue I happen to have a collection of strengths that make me ideal I think for this position I come from a background as a city council member I was a city council member for 12 years here in Montalier I know the ins and outs of how what people are looking for how a board should work when I first came to the board part of the problem was really strategy and direction and how you focus the board meeting they would meet from eight to five and and strategy discussions were we're not really laser focused and that is and that is a key function of a chair which is really to look at what are the key issues that we have to address and it's interesting I looked over and I told you this the other day I looked over an email I sent our former director of investments you know a couple months after I started and it was basically the seven items that we're talking about today which included benchmarking indexing looking at a better way of looking at this portfolio really critically analyzing the need for internal staff versus external management and looking at all of the fees that we have paid and so state government and state pension funds are not like your own personal portfolio it takes time to work through the process and so it's I don't want to use the titanic analogy because that has a bad ending but but I think it is like moving a a big ship and so there's incremental changes you have to make each year to really see positive results and to become in the top quartile in peer performance it doesn't it doesn't happen overnight I get it that you know we need investment staff to help manage us one of the priorities I had when we first started was to professionalize the staff so if I do get hit by a bus these these policies and protocols will be ingrained in how they do business in in the state pension fund and so bringing in a quality CIO was my priority that took two years because we had to get approval for for payroll change we had to get go through the whole state process we had a a robust RFP to to change our investment consultant because because we felt we weren't getting the investment advice that we needed quite frankly and so these changes are incremental I'm hopefully implementing changes that will will go on behind me I worry if you change it right now you're going to lose a lot of that momentum and I just respectfully ask the ability to have the the study follow through possibly into the summer maybe early fall so you would be able to make informed decisions I'm not averse to change I think change is good new structure is good a new board is good I just would worry about the implication of saying we're getting rid of VPIC and how that would impact our progress so hopefully that answers your question no I understand that concern one other question is do you think VPIC should be more independent of the Treasurer's Office? I do and it has no disrespect for Beth because I think Beth has a tremendous has been a tremendous advocate for defined benefit plans I think as the pension system you know grows and becomes much you know bigger obviously as you add more money into it it becomes bigger I guess from 5 billion to 10 billion there needs to be some level of independence so decisions aren't made politically decisions are made thoughtfully amongst a good group of fiduciaries that being said the Treasurer's Office performs a a key role right now that independence probably is going to take more than you know it's going to take a while particularly among the state process you know the Treasurer's Office provides a tremendous amount of key support both from plan administration as well as contracting you know we use the Attorney General's Office you know for for advice it will not happen overnight and so I look at Beth I worry about the political implications of the governance model structure where the Treasurer is is placed in charge as new chair the reality is it may not be Beth at some point you know Beth no no offense I think we have to plan for a world without Beth and how does that world look including a world without me and I think that is a goal and I know the prior investment director of VPIC wanted that to be a priority of mine early on and I didn't think we were ready we're getting close but it's going to entail more staff it's going to entail you know does this new entity function as the plan benefit provider does it create it's a website like other states have there's a lot of issues of structure that I don't think have been worked out there also always needs to be a memorandum of understanding with the Treasurer's Office because of the work what we do in concert thank you Peter Anthony thank you Madam Chair and thank you Mr. Galanca I returned to a theme John most recently touched on and namely what's a good size board if it's a reconfigured VPAC and I guess the subsidiary question that John most recently focused in on how can we be structured for success as opposed to be so pardon the phrase idiosyncratically dependent on a couple of very talented people it's that's that's a real challenge in Vermont I mean I love my state but we're not overrun with people who are in a position to volunteer for nothing virtually and are also the best and the brightest so those are the two areas which which I'm grappling with thank you well get into your question your first question I think it's always a struggle um actually refresh the topic I'm down your second question the first question again could repeat that my computer is going in and out what's a good size board oh size board I've been on many boards and I found a good size board is seven to 12 you know I don't I think once you get past that it's very difficult to to function I read the Boston College report that Rep. Senator Gannon reported I think they listed six to ten I think a board of this nature is probably going to be around 10 you know would work very well 17 gets a little unwieldy and and I'd be concerned over that and the second part of your question in regards to how do you get volunteers um you get volunteers by making the making the committee meetings meaningful and what I mean by that is we've had a bunch of volunteers that felt that they weren't utilized correctly or that we were wasting their time and so I worry again in in regards to the structure some of the subsidiary boards particularly if the big board has ultimate authority may feel obsolete and it will be much much more difficult to get volunteers so I think your second question is great because it is difficult to get volunteers to work here in the state of Vermont but I think if they see a common vision or of an interest level I think it's fascinating you know particularly you know working with institutional money but it would be a challenge in Vermont particularly I think with compliance constraints and the number of people and travel you know we're working through COVID world is through zoom but in the past it was a day trip to Montpelier and it was a day or two day two day venture I hope we were able to expand on interactive meetings like this where people can participate and also work at the same time Madam Chair if I may be permitted to follow up since it's come up my experience with board members and their eagerness to stick with it also revolves around meaningful meeting but part of the content of a meaningful meeting is that at the end of that meeting the conclusions decisions and here's the linkage part can be translated into action that the board members feel good about that they actually made a difference and something happened stay after tomorrow that was not true yesterday could you comment on that I'd argue that current VPIC members would say the latter that they do feel valued and they feel like they have made a contribution into into making a more sustainable system for the state of Vermont you know we're at about 5.3 billion now your study shows us at 4.5 that's you know 800 million dollars that we you know it's it's a significant amount that warrants discussion not necessarily that it's going to continue but but I think I think members feel wanted and members feel utilized for their expertise and capacities I had a long conversation yesterday with Kim Gleason and her her representation on veimers and her passion for veimers and it's it's interesting to see there are there are fewer and fewer people in Vermont that are willing to step up and so that is a challenge and making meetings more meaningful I think is paramount I worry you'll make the other subsidiary boards meeting plus meaningful so committee we have we're at a decision point here because we have two places where we could be and could well use our time this morning we also have the advantage of being in a remote meeting environment where we can we can also get the information that we need to from the other meeting that's happening right now so what I'm wondering committee is would you like to continue with this and and review the judicial retention presentations knowing that you have until April 5 I believe to return your judicial retention ballots or would you like to push a pause here in committee right now go to judicial retention and hope that we can come back to this conversation before lunchtime so committee if you if anyone has thoughts on that please unmute and weigh in I'd like to stick with it Madam Chair you know I choose number one all right we are feeling good about listening into the judicial retention reports on our own time all right great thank you I just want to clarify there do April 1st not April 1st not April 5th okay thank you April Fool's Day there we go um okay so we'll continue with what we're doing here and um I think next I'd like to invite Beth Pierce to share her thoughts on the proposed governance changes that we put on the table yesterday so Beth thanks for being with us this morning well thank you very much I did send over a package um and don't be alarmed by the size I was responding to some other informational needs that the committee had expressed but the first 10 or so pages of what what we're really looking at um but before we start this I think that we need to put some things in perspective and frankly I'm troubled when I listen to the conversation we've been having over this over the last several months frankly since some since I produced my first report on this um and it's it's been a lot of well sort of like what we used to see in DC a very dysfunctional process uh you know everybody is upset and they're looking for somebody to blame so you know wall streets to blame well no it's not wall street it's the actuary no it's not the actuary because the actuary made the best they could but you know the decisions that were made by the general assembly or the governor in terms of workforce or people or not funding something they're to blame uh no it's not that it's the investment board nope they made a change so then we you know we have to move on and say it's something else that's not what we're supposed to be doing what we're supposed to be doing is solving the problem together and for me it's time to step up and say we all have a share in this we all have work to do now I can point to things that were done by different parts of this group whether it's a general assembly whether it's governor whether it's our office whether it's investments whether it's the actuary we're all in this together and that's trying to find the solution and work together is uh something I wanted to say up front because it as I listen to this testimony it's not about giving you a bill and nothing's uh and an absence of anything else there's been communication we need to work together we need to refine that communication but it's it's it's it's just not the case and we now have to all recognize we're all part of this we have to work together so on that note I'm going to start with my presentation and thank you for giving me the the the latitude to have that that piece and hopefully I can get to my presentation there we are so um I had five um and these are says preliminary review preliminary review because we haven't had um a um a long time to like take a look at this but I have five points the first is that replacing the uh the replacement of vpik with the adoption of the vermont retirement commission I would not recommend it for a number of reasons uh one the vpik structure is showing results as uh tom has said we've also begun a process to look at a uh studied by an independent consultant we did that back in 2005 it was created the legislature asked us to do a study we changed the composition of the board from a group of 17 to the six plus one that we have now we went through some other processes there to me if we're going to do this that's not just jump to do something let's make sure we're doing the right thing we're working together in a thoughtful thorough way and that we do need to have that type of study before we jump ahead with the conclusions I would as as I heard others folks as well say that we need to change the actuary statute the the statute so that we complete experience studies every three years rather than the current five years I think if you look at the data I had later earlier I'm later in the report you'll see that we've done a little bit of that but I think putting that in statute is absolutely um a good way to go and I think they were all in on the same page on that I was confused by the report which said that return assumption and actuarial assumptions would be done by the commission I hope that doesn't mean all assumptions because the actuarial assumption in terms of rate of return perhaps take a look at the real rate of return including inflation might be something I think that the VPIC would be the most authoritative group to make that go through that process the reality is the demographic speech system varies the turnover as we've seen as policy changes have been made and the teacher side with the impact of that is on retirements and the impact on turnover I think that those other assumptions need to stay with the the respective boards I'm not sure if I read that correctly so I did want to clarify that I do believe that there should be it should be under the authority of the VPIC they said another assumed rate of return return that said I think that you're correct in pointing out that there should be input from the other groups but in the end one you know having a situation where you could have a veto if one group disagrees is not a good set of organizational set and again keeping the remaining actuarial assumptions with the trustee boards where they belong there are existing there was some discussion about training and what is done there and in the past testimony and some of the things that I've heard over the last week and you know what do they how are they trained and and what the enabling statute is fairly skimpy on that and that we should do more to to codify that I've attached in my presentation a very well developed a very well developed educational policy that VPIC has and it's several pages I invite to its appendix a I believe in my my package it's very well defined it talks to the to the issues as a as a fiduciary we are doing that I think it's great that it's being done and I think the leadership of again Tom as we're moving forward it's there but I think codifying that or putting some of that policy or just defining that you should have such a policy into the statute would be something that we can do but I would invite you to take a look at that it is very meaningful and they hold the members feet to the fire in terms of getting maintaining their and improving their their knowledge of investments you know we talked a little earlier about whether a former teacher board member was a what was a special expert or not and I like the term that that Jeff said a learned person we have a lot of learning folks in this state that can with the right background and the right opportunities for training be very useful members in this committee I venture to guess if I ask most of you on this committee may represent again and I won't do the quiz but you know if you asked you what was a risk parity investment most of you would probably say you don't know but I can assure you that Joe Mackey who's a former teacher and retiree knows that he knows the components of it he knows same thing that I do which is we don't want that in our fund I think Tom would agree with that as well they've learned that over the years they're learning people they've they've learned and they need to be respected for their contributions to the board we also have a recommendation with respect to the financial information I've attached in a in Appendix B a lot of information that's out there we have information in our annual report which we send to the general assembly which meets basically everything that you've been asking for it's there in in written form sent to you annually on the 15th of January we have performance data we have material data we have underfunding reports we have a site on transparency by the way which was given an award because we're the first one in the country to do that level of transparency so that's all out there and I invite you to take a look at it at that same time I think codifying that in statute is a very good idea and and we should take take that step there's also a group of reports just to cover is to remind you that we have made these presentations and what the upward pressures are in terms of retirement upward pressures whether it's a turnover whether it's salaries whether it's position levels whether it's read incentive programs whether it's underfunding whether it's a continued underfunding of health care whatever it might be and have those and submitted those to the various committees including government operations so there's a little bit of a power point with just the front pages of those and if you'd like to see any of those reports that are available in my office so that's pretty much it I would like to get back to a couple of points on again item number one on the list which is the the investment the VRC I guess the the commission I think there's some issues with it that's again take the time to do it right commission size I would agree that smaller is better commission composition we've talked a little bit about that and I have copied the GFA government finance officers association recommendations around that and a diverse group including employee membership or a member members of the system is part of it I think that this when I read the and look at the numbers in this in this proposal it diminishes the impact those folks have I think chair appointment is very important the particular proposal says would make me the chair and I think that's a mistake not because I don't think I can do the job but I think that number one it should not be an elected person is the chair of the committee and you don't know who the next treasurer is going to be many years down the road I hope but you you don't want to put VPIC or whatever subsequent entity although I think VPIC is the model you should continue in the hands of any elected official it should be an appointed a chair an independent chair that's appointed and has the skillset such as Tom and is that the pleasure of the board the six-member board we we evaluate we reevaluate the job description we evaluate his performance every year and and provide feedback to Tom and he's done a great job I think that again it's it would be better to have that model than to to put the treasurer in in that position I'm on 29 or 30 boards and committees by the way so I recognize that there's a lot of other areas that we would need to concentrate on as well and I think that an independent chair could give it the attention that it needs and deserves and I think it helps with decision making frankly and getting to the question about should it be part of the treasurer's office I am a proponent as is Tom and is that we should be spinning this off into its own entity and standing away from away from the the politics that you might see in the current structure outside politics inside VPIC I would agree with Bob Hooper I would agree sorry representative Hooper Tom that there is no politics in that meeting but the the political structure that it is in and what we're seeing right now I would like to see a separate entity spun off and have the authority to do and do the kind of good work that needs to be done I'm thinking of a model instead of the New Hampshire model which you put out there and by the way the New Hampshire model is for a joint trustee board and investment committee so I don't think it necessarily follows to the the configuration that we have in this state I'm thinking more of the model imprim massachusetts pension reserve investment management reserve system these what they call swib the the state of wisconsin investment board florida I believe has one too that's a much more distinct separate unit that has the independence is and can hire the types of consultants it needs has it has a as a strong chair and a great cio to go with it we have those right now we've got a strong chair we got a great cio my office provides the support it needs we will continue to be able to provide that but I think moving toward that independent model is the way to go I'll wait to see what the the consultant says as well I think we need to hire a consultant with that skill set to do this this is too important to just run and do this quickly because we think that there's a need to to settle some some issue that again we're going back and forth who's the blame this is not that time this is let's do a thoughtful approach about how we can make it better and how we can move forward and I would wait until we were able to to get a professional consultant in to take a look at this as Tom said over the summer or in the fall and bring that bring any solutions and recommendations back to you in in time for the next legislative session thank you Beth um Bob Hooper has his hand up thank you madam chair madam treasurer it is one of my greatest pleasures in life no matter how many times we butt heads to be on a first name basis with you and I okay I object to you trying to change that at this point um I wish you would expound a little bit and and I appreciate the the level of expertise that you bring to this discussion and your recommendations um much has been made about the actuary being wrong and giving us assumptions that were wrong and my impression of that is sort of the other side and I I wish you would correct me if I am wrong that the actuary gave us estimates on what basically national experience should be and that our workforce was deviant to that experience and that's the spread it's not a question of being wrong it's a question of us being different and if that is the case how in the future do we compensate for that difference well you know an actuary will take um national trends so you're correct um representative Hooper while you're in this committee I'm going to call you that you know so hey but in my in my phone uh my phone lists your code Hoop we'll leave it at that too but um um the um the actuary does look at national trends for instance on on rated return we're not looking at how did we perform because it's not the uh you know the um the uh tail wagging the dog or vice versa I never get those things quite right but um they're looking at national trends what's the what's the market looking like what are the capital markets likely to do over the next 30 years and they're coming up with with assumptions based on that they take our asset allocation and they put it into the model but you do not want to be in a position where the the um the required rate of return is a thing pushing the um pushing the envelope on what you do for investments they you should have an investment um um investment strategy that takes the maximizes return with the appropriate level of risk but so they do look at it national trends they look at mortality now I remember I think it was um um uh uh Representative Anthony you were talking about you know the teacher versus a um forklift operator I'm not sure if I remember the quite the occupation but they do take a look at the types of occupations they take a look at the um uh the um um different mortality scales for those and they try to blend that to what our population looks like so the mortality in a uh table for a teacher system is going to be very different than the mortality uh table for a municipal system or a state system they're going to take a look at those issues and they're going to make some assumptions based on the best data that they have they take a look at inflation rates from a variety of different uh sources uh sources um but things do happen as um as someone said earlier um you know someone in DC makes a statement and all of a sudden the markets are you know um you know and a bit of a royal uh there are other pieces that are in our control and where we have varied for instance again getting back to um I'm taking a look at the presentation I sent you last Friday and I'm taking a look at the teachers and one of the pieces in there for the uh why we were off from our gains and losses was a contribution shortfall for the health care um appropriation uh as treasurer in 2012 I brought down to your attention that um we uh we were not fully funding the health care as a sub funder the pension system uh we did fix that but it didn't happen to 2015 um so that was responsible for from 2011 to 2020 remembering that it's only 11 to 15 101 million dollars of the of the um the losses the turnover net turnover um for the for the employees um in the teacher system so hiring and and and terminations and turnover of staff about 320 million dollars of the um of the of the changes that has a lot to do with education policy it has a lot to do with property tax policy it has a lot to do with um uh uh additional functions that a teacher might have and someone brought up the issue of bennington today I think that was Jeff and some of the some of the um um uh the external events that may have a an impact on people's decisions to stay COVID certainly has an impact on that similarly retirements people's decisions to retire an actuary is going to do based on trends that we've seen but as things change as there are more pressures there will be variances to that um so again I would say that the actuary is doing their best to to to come up with assumptions that um that are predictive and are the best but you're going to have variances against them and a lot have to do with external events national trends and the others have to do with the decisions we make as a state around the issues of turnover around the issues of contributions around the issues of um of salaries and positions and we have some control over those Peter Anthony thank you very much Beth you you um you stopped just where I wanted you to if that even though I didn't have any influence over I think uh rep hooper is getting at a subject which did come up I I beg the chair's indulgence because I am crossing over from governance but the point is if there's a a strict sort of firewall between the governance structure managing the asset pool as opposed to other entities that are managing the the sort of benefit configuration where you ended up is a point at which the actuaries could not possibly anticipate and it's the bugaboo if you'll permit the phrase of an aspect of local control whereas the state does not control it turns out a lot of the decision-making revolving around retirement I'm not sure they should but the point is it makes it a very unsuccessful attempt because you don't know what the incentives are in a decentralized decision making environment which we have in one aspect of this business and that's maybe it's a minority of the overall dynamic but it has proven to be quite important statistically and and financially so how do we integrate that because it's not true that the state has control of that thank you yeah well I think they have some control in other parts they do not I would agree with you and again I remember testifying in front of this committee and in front of appropriations and I remember occasion senate finance as well and my analogy was when you take the balloon and you press it at one end in terms of local decisions around property tax local decisions around schools and and and whether you're going to say we want to give an incentive to have some teachers retire so that done comes in with other folks come in with lower salaries although I understand that a lot of that is already kind of worked its way through in my conversations with Jeff but when you press the balloon at this end the balloon comes out at the other end you know what I mean and hopefully the balloon doesn't pop but there are issues of that that are in our control and others that are not in our control we can look at trends but as we change policy it's it's an actuary does not have a crystal ball that's going to say you know that we're going to make this change in terms of of our school contracts for instance or something along that line and be able to predict the impact of that so they do the best with the trends that they have the information they have and I think they do a good job but we have different factors that are involved national decisions and I remember when I said this in earlier testimony when a certain senator said that it was okay if states and and and localities went bankrupt he wasn't worried about that in the next day the bond market went sky high and everything went went went crazy you know something happened in November of 16 that had an impact on the interest rates again trying to stay away from the politics these are national trends no one's going to predict who the president is and what the the market is going to to look like they're going to look at capital market markets and and and see but you know there's variability and volatility in these things the same time there's there's issues at the local level as we as you just pointed out that was very very helpful representative and there are things that within the legislature that we can do within the within the within the investment committee that we can do as I said earlier this should not be a who's to blame this should be about how are we going to work together to find solutions no one is handing you a bill without an understanding of of where the pieces are coming from and we all have to work together to find the solutions now that gets back to governance that some of that I just talked about is benefits and and liabilities but it really gets back to governance you need to have the proper professionals in the right places to do this and to do it well and I believe that the current VPIC structure is close to that as Tom said we're evolving I think that as we move forward and we create an entity that stands on its own similar to the Massachusetts model similar to the Wisconsin model not the New Hampshire model but those models I think you're going to have better better economies of scale increased performance and and a much more nimble um um entity moving forward of Hooper thank you madam chair I may be going into minutiae here and I would appreciate your stopping me if you think so too Beth a lot has been made about the legislature's underfunding in the past as being our contribute to a contribution to this problem um in terms of the actuaries analysis of where our plans are we've heard some reference to the teachers basically taking a higher paying job a couple years before retirement which effectively is kind of like spiking and could be managed but on a on a global scale does the actuary have the ability to look into situations like our state police where we're down 30 positions so other officers are working a lot of extra overtime or our correctional facilities where we have the same problem where extra and massive amounts of overtime are being injected into the system in unanticipated ways and therefore changing what we're expecting to see in terms of workforce yeah so I would say yes and no they do look at our trends so when we did a risk assessment and we did a very comprehensive risk assessment a while back on representative gannon you were part of that process and if you recall we took a look at trends of it inflows and outflows so when you do a valuation you're saying this is a closed period it's as of june 30th 2020 2019 and so on in an open process what you're looking and saying what are the trends what's the turnover coming in and leaving so we have some historical data on that but as you just pointed out workforce changes and workforce issues vacancies have an impact on people's lives and workforce decisions workforce policies impact people's decisions about retirement and an actuary again can look at trends they can make some assumptions based on on probabilities retirements of different salaries and ages and that's that's in their tables but if you have a a specific workforce change or process that it's it's implemented after after the valuation you're going to have variation your workforce clearly is an issue on a policy decisions made that has an impact on the results I don't know if I went around the around on that one representative hooper my my point kind of was that our our or the administration's position on not making sure the government is running the way it should be and is expected to be which would include making sure positions are filled and that our our friends are consistent plays a role in this so we're not all immune from the critique I guess yeah absolutely absolutely now on the other hand go in the other direction and I use this example earlier in 2010 and in 2016 so two different governors made proposals for retirement incentives so incentivizing people to give them a cash incentive to go out the door and and presumably that would reduce operating costs recognizing it would have an increased cost on the pensions we pointed out the the the need to remember that again pressing the balloon on one side you have the the the the impact on the other and personnel personnel decisions had an impact on that the first one we did I believe and this is off the top of my head so it could be it's the best of my memory at the moment our initial assumption was that the retirement incentive would increase the unfunded liability by roughly 79 million dollars and it also assumed on the other end on the operating cost that you'd have a break even point if you kept one third of the positions vacant after that that occurred instead of that happening from 2010 to 2014 we added 543 positions now those are decisions that are made in appropriations those are decisions that are made in in in terms of workforce and in needs and I'm not going to second guess any of those decisions because I'm not a workforce expert I don't know what the needs are in corrections versus social services you folks have a better feel for that than I do but those decisions impacted because now instead of having those positions open you'd now put an additional people into those positions which creates additional liabilities for the pension system above and beyond the original projection in 16 we said we're going to do a better job okay we're going to do this again we're going to do a better job it was a smaller and I think we had a net 10 reduction and the last time I took a look at it we failed to meet the the objectives again in terms of vacancies those have an impact on on on the the evaluation results and on the on the assumptions it's a group process they're all interrelated and we have to again work and find solutions and find the underlying issues instead of saying well they did it wrong or Wall Street did it wrong you know it's again going back it's the hedge funds guys did it to us well we don't have any hedge funds so that can't be it but again it's it's it's it's a group effort to solve the problem in a group effort to analyze it and the same type of analysis needs to happen with respect to creating the a retirement commission I think that it's premature until we get to all the data points that we need thank you thank you John Ganon thank you Madam Chair and thank you Beth for testifying this morning and for all your hard work on pensions you said that BPIC is headed in the right direction and I agree I mean I think under Tom Galanca's leadership we've seen investment performance improve we've seen fees decline those are both great things but you know the question I asked Tom was how can we structurally ensure that that continues so I don't want to point fingers at problems in the past but how can we make sure that we keep on the wonderful track we are on today yep so I think there are a couple of things number one paying the appropriate salary for a CIO Tom and I went through a big interview process for that position way back and the problem we had and bringing in quality is everyone we talked to said can't do it you know for that salary can't do it for that salary and I want to thank Secretary of Administration Suzanne Young because we had that conversation with her and she said okay we'll give you a little more room on the compensation site we're still at the low end and no disrespect I would pay Eric 10 times more if I could he's he does an exceptional job but you have to have quality folks and we tried to do it on the you know on the cheap too many times and we were able to get a change there to allow us to bring in a quality person we also need to retain that individual and part of the way we retain here that individual is making that individual not just with salary feel worthwhile and this gets back to the to the performance of the fund and recognizing that these people are adding value and and and moving forward there I think the other is to have that independent chair that it would not be as as as outlined in the proposal that the treasurer would be the the chair of the committee I very much think that the pick has to live on its own and be I want to be on the committee I think the treasurer should be on the committee but I don't think the treasurer should be the chair and I don't believe that it should be housed within the treasurer's office we will provide services but I think it's an entity that stands on its own issues its own financial statements to be very frank that's what I see in massachusetts the um um the prim pension reserve investment management I spent a while since I've been there so I had to think about the acronym a bit but they issue their own financial statements they do work with us when I was a deputy in massachusetts I talked to the person over in um in prim every every month talk about cash flows and how much money they needed and more than that if they needed more after they set we set the numbers they weren't getting it you know and and things along that line that uh but so we would have to have those relationships but the reality is that that is a in my mind a better model than the one that we're looking at right now and I think that compensating people correctly compensating the chair I have to tell you what Tom does you know in terms of the amount of time the amount of salary he gets which is one third of the treasure is salary which you know um isn't that much um but uh is that the amount of money he gets for what he has to do he'd make uh you know um a lot more money I shouldn't say it I was going to say at um as some other job I won't say and um and have a lot less stress and uh um you need to bring in people that are dedicated and so I think the compensation of the chair should be looked at down the road too um because you know it's hard to bring in volunteers that will do this day in day out especially in this such a gluing intense environment that we're seeing in terms of our um our national state and local um institutions right now well thank you for that and just to follow up on the prim model because I am quite familiar with that and the compensation um that like Michael Trotsky um pulls down um you know I think there would be some people on this committee and some people in the legislature they would have heartburn um over over some of those salaries um having been in the securities world um obviously on the regulatory side I understand those salaries um and the need for them but how can we convince other people of the importance of that type of compensation? Well I think it's a it's it's two parts you know when I left Massachusetts and came to Vermont uh deputy treasurer there came here as deputy treasurer I took a big cut in pay okay and I wanted to because I wanted to be in Vermont I enjoyed the lifestyle and uh you know and it's a type of political environment as I was talking about in the in the front end and I hope we keep it where people work together collaboratively you know as opposed to as I say the the institutions we see in DC um so um I was willing to do some of that okay when I came here um the I just lost a train of thought I'm sorry uh Representative Gannon can you just run that by me one more time? It was it's getting a compensation issue of the amount of money that you have to pay uh investment experts um that you to retain them and to get the the best people because if you're gonna play with Wall Street unfortunately you have to pay close to what Wall Street? Yeah you know it um thank you and again I don't think it has to be a massive um salary you know I think the Vermont has ways of in terms of this quality of life to to attract people that's why many of us are here that said you need to be able to compensate employees um appropriately I'm not too fond of bonuses over benchmarks to be honest which is one of the models I do see in in premium and others and I think that that gets into uh you beat the benchmark but you had a loss um and you get a a a X amount of bonus and I think that that equation doesn't really work for me um it might work for some folks and other and other uh entities but um I do think that proper compensation proper training um and um and the ability to have a meaningful job is is important to me it's important to people that are here I know it's important to everybody in this room and uh and making sure that folks have that um that have that flexibility but recognizing that it does cost to produce results you have to put in the cost to do that. Thank you Beth. Thank you Beth for uh for sharing your thoughts with us and also for giving a few moments for committee questions um we have three more folks that I'd like to hear from before we break and we do have a hard stop at noon because I know a number of people have um lunchtime meetings um so I think next what I'd like to do is uh is go to Mark Crow um the Vermont Business Roundtable had a Pension and Health Benefits Task Force uh has one um and uh Mark I'd like to invite you to share uh any thoughts or perspective you have on governance changes in Vermont's retirement system. Thank you Madam Chair and uh thanks everyone for taking this on. I uh really really appreciate the thoughtfulness and thoroughness of this process that I've seen so far um as as uh Madam Chair pointed out I'm representing the Vermont Business Roundtable and the Chair of their Pension and Retirement Health Benefits Task Force um but uh with at the risk of uh giving away my age uh in a past life I was a business attorney uh for 19 years too long and uh worked with a lot of different types of organizations and entities and as a result have significant experience uh around governance issues um so basically where I'm coming from and where the round table is coming from is our concern is that you know there's basically three tenets to address we believe in providing best practices for strong governance. One is effectiveness and efficiency of operations. Two is a level of expertise and three is a level of independence. Now looking at what has been proposed we think this proposal goes a long way towards achieving these tenets but of course we do have some thoughts for consideration. Starting with the effectiveness slash efficiency of operations tenant and specifically focusing on board size we agree with a lot of what's already been said here. We think that a 15 member board with 13 members voting will get unwieldy and not be as effective as it could be um you know with with respect to charitable nonprofits or uh or associations for example that number of board members in hire is not uncommon but for boards that are managing operations like this it is it is much more uh prevalent to be at a smaller size and as uh I think Tom pointed out and as uh Representative Gannon submitted the Boston College resource research report recommends six to ten board members and actually their report says 58 percent of who they reported on have board sizes of eight to 13. Again we think that allows for not only stakeholder participation but is then small enough to function effectively so that's our main comment as far as uh effectiveness and efficiency. The next tenant I want to address is expertise. We feel this is vital to ensuring good governance and we really applaud the efforts of this proposal to try to provide that. We will point out though that we do think that that expertise needs to be defined in a more definitive fashion in the proposal and that's for a couple reasons. One to take any sort of uh to take as much of the discretionary decision making as possible out of it and thus any sort of politics might enter into it um and to make it easier to understand who fits that bill so that everybody's expectations are properly managed and two as I think Tom alluded to earlier uh my gut says that uh there isn't really a huge pool of people that might meet that the level of expertise you're looking for depending on how it's defined so it's better to kind of I think factor that in up front and factor that into the criteria that you want to consider when defining what expertise means and then um the last bucket which is independence or some level of that I have a few a few points under that um one is um as far as the composition of the board and uh the investment committee um again setting aside the size uh for now and just focusing on what's been proposed um I you know really we obviously there has to be some uh uh interested parties or this won't work um and and but there also needs to be a sufficient level of independent non interested parties um to to make this effective and fair to everyone um and we and we and this proposal attempts to do that through uh the uh employer representatives and the public representatives and to a lesser extent the legislative appointees as far as the employer and public representatives uh we recommend one concern is that they are in both instances nominated by the board by the trustees great yes there are they're supposed to appoint three people for the governor or treasurer to choose from but we think having them nominated is uh by the by the trustees is just too much of a potential for uh electing a semi interested party to a position that is uh to be non non interested um and as an example uh there was a commentary today uh from a gentleman by the name of Matthew Cunningham Cook in the uh Vermont Digger who uh is uh I think a very interested party in one direction regarding this issue but he would uh is also a public pension expert and if we had three of them of people like him nominated nominated by the board I don't know that the subsequent appointment by the governor or treasurer whoever it might be uh would be would be agreeable um two uh are as far as who appoints it appoints these positions again I'm talking about the employer and public reps um we think it should be done by the governor or the legislature or a combination of both uh now in one instance I think it's the public it is done by the governor but as far as the uh uh the employer board it's done by the treasurer who again is a beneficiary uh under these plans and so we don't think that I'm not as the position not talking about Beth in particular but we don't think the treasurer uh should be appointing that uh or a person um you know and also I'll say that if you look at the present structure you know really at the bottom line there's really only two totally independent trustees and those are the ones appointed by the governor I guess you could also say that the commissioner uh uh might be also uh indirectly a government appoint appointee and there's a max of and then if as I said if you consider the three public board members as independent yes maybe technically but again if they're nominated by the trustees I'm not so sure um now I move again under the independence bucket if you will or tenant uh the legislative appointees I guess on that point um I'm confused because I I'm not sure what the point of having them included is if they have no voting power um yes I understand that they uh uh will provide experience because they have to be experienced to be appointed and so can advise from that perspective but you're already getting that from the public appointees to some degree and and the other thing is and I'm going to touch on this a little bit more below below the other thing is if they're supposed to be uh uh quote watchdogs to some degree for the legislature I think there's a more direct and better way uh to do that and I'm going to talk about that in a second um then then I'm moving to the investment committee again under this independence tenant um right now they're supposed to be comprised of five three of which need to be have experience in our opinion all of these uh committee members should be independent um and uh right now there could really only be at the most uh the if we took it at its face that would mean that only the public uh uh appointees could really serve yes the treasurer definitely should be on it and should provide guidance but our opinion is that she shouldn't have the ability to vote uh again because she's ultimately a benefit a beneficiary under these plans and uh she or he sorry Beth um and so we think truly that investment committee needs to be uh totally independent uh and again the other thing that needs to be clear is in saying who has experience on there it's not clear under the current proposal whether these legislative appointees who have no voting power would qualify as experienced members of the investment committee so I think there needs to be some clarification there um uh I do uh I know that uh Beth has talked about a few different models um as far as far as uh uh how the the board can be comprised I'm not familiar with those other models but in looking at the New Hampshire New Hampshire model which this has been uh modeled after uh I'm wondering if we're wondering if it should be even closer model to the New Hampshire model again to simplify and and reduce the number in that model which you may or may not know there's one person from each board there's one person from each employer there's the treasurer and they're all appointed by the governor or New Hampshire's uh situation also the executive council which is works with the governor that's something we don't have in our government um so because I do again I think simple is better um the other thing about independence uh is there should be a mechanism for uh determining what constitutes potential conflicts of interest again maybe that's addressed somewhere else but I think it's important that it should be addressed within this document however it is formatted ultimately and and at a minimum it should it should provide that no no one none of the independent quote independent uh members should have a direct or indirect economic relationship for example they shouldn't work for an investment advisor who is somehow investing funds on behalf of uh uh uh uh the the pensions um and then also there should be uh there shouldn't be any family directly or indirectly beneficiary serving so anyone who's on who serves shouldn't have a spouse a parent in-law siblings or children who are somehow benefiting from uh the beneficiaries again there's a wealth of uh of documentation and and ethical considerations around this and forms that you can pull from to come up to define this but at the bottom line there needs to be a definition of what constitutes a potential conflict of interest um a third component under independence is actuary selection again maybe this is addressed elsewhere um but with respect to this proposal there is there isn't it is addressed how the investment uh people will be selected but I don't see anything as far as how the actuary will be selected and I think that's particularly important given um all the talk around missed assumptions over the past several years there should be some formal process some bidding process that's done on a periodic basis that selects the actuary I don't think it's a good idea to have also to have the same actuary year after year after year which has been done in the past I know recently it was switched up but again there should be a formal procedure that everyone participates in to determine who that actuary is um the and I the next point under independence is uh legislative oversight I and this relates to earlier when I was talking about uh the legislative appointees again I'm not sure of the rationale for them but I think a better way if it is to be quote a watchdog the bottom line is somebody in the legislature needs to be looking over this stuff maybe technically they were in the past but I think it needs to be more there needs to be more of a formality and whether that's a joint committee of the senate and the house whether it's separate committees there should someone should be looking at this there should be annual reports issued by the by this committee to to the legislature um or some even shorter that talks about not only just the ADEC but all the other pertinent information about what's gone what's been going on and and how things are going um again I don't think the legislate if that's their purpose the legislative appointees go far and off in doing this um another point under independence is education and somebody touched on this earlier too I think and again maybe this exists in the VPIC world but I think for this this uh uh entity there should be an onboard onboarding and continuing education for all members uh and whether that's through workshops whether it's through through a governance manual or both or some other means of doing so I think that's very important again to get people familiar even because even people who have expertise will need some refreshers around the specifics but about pension and OPEB basics about how the funding works about key terms that are involved and about investment standards and probably most importantly about fiduciary duties and what that means on an individual basis again the New Hampshire model has a lot of information about that I saw and then the last piece under independence is uh I noticed in the proposal there is a provision for the trust the trustee boards to make recommendations if there are proposed changes uh made by the actuary and investment consultants again I'm not sure I understand the purpose of this uh because it seems like it's a second swipe at the ball since there already will be board reps at the at the at the uh decision-making level so why the trustee boards need to weigh in again independently uh just seems to muddy the waters um and also you know what happens if the the board disagrees with the representatives again further muddying of the waters um so those are the three tenants and the individual components under that we're concerned with um as far I do have a couple other points under the other category one is we applaud uh uh including experience studies on a more frequent basis three years but we still think there should be a stress test uh done um and it would we highly recommend at least an annual or a two-year basis I mean I just want to be clear here that an experience study is not the same as a stress test an experience study primarily looks at what has been done and and where and and how we did as far as people retiring how what benefit claims there were that sort of thing a stress test looks more at the looks at the past too but also looks at the future and and looks at potential changes in the economic conditions what would happen if there's a downturn how likely is the downturn what are we going to do about it so I just want to make sure that you know that's great that we we are going to accelerate and have more experience studies but I really think um you should be considering incorporating a stress test which I know was talked about in another uh hearing um and then uh uh and then uh I'm going to never mind on the last point and then I'm going to say one final thing and I know I'm kind of crossing the line here but I keep hearing about how there's so many factors involved and all of which is true that there's so many factors involved and that things are unpredictable and that the actuaries do the best they can based on the information they have meanwhile finance people we all know try to predict things all the time right and so as I hear how we do the best we can and we're always trying to but yet we're missing things and but there's because there's so many different factors I scratch my head and wonder why are we continuing to go down this defined benefit path when we're always on the losing end of it again I'm going to shut up on that point but it just in listening to the things I find it a little bit frustrating but again that's not about governance I want to stop there thank you again for very much for the time here and um again I appreciate your efforts and I'm open to any questions right with respect to the governance proposal and and Mr. Crow's reactions to that does anyone in the committee have a question all right thank you very much for for your clear outline and and putting your observations into categories I think is helpful for us to to frame how we're thinking about the task at hand so committee we we have John Harris with us who is the chair of the teacher system board so John thank you for your patience this morning and please share your observations with us well thank you for asking me to testify today um I don't I won't be repeating what I heard from Tom and Beth but right out of the box I think it would be a huge mistake changing from the current VPIC model I have been part of the retirement board and have watched the evolution of the current VPIC board from its original 17 member board down to the seven the changeovers that Tom has done so there has been you know an evolution of that and I think it would be imperative now is to take the gains that and the changes that have happened with the current VPIC board and to the concerns that were mentioned earlier um in terms of trying to institutionalize these things so that when when there is a change in leadership in terms of the chair or the or the staff I think that there are ways to have legislation to support and and or and or policies to support the the direction in which the current VPIC is going um VPIC size I was there for the at 17 I was there at at seven and and I think the education component is critical as been mentioned by by other people one of the reasons I left VPIC and had another member represent the teachers board was the time commitment and education um you know to try to keep a full-time job and then also I was you know as an active educator to to miss one day a month uh full day uh I just couldn't do it and um you know to be out of the classroom that time so you know fortunately the retired member on our board had that expertise um in finance because we were already prior to VPIC the the the individual boards were doing all of the investment decisions themselves so you know for for us that have been on the board for when I first came on the board our investment consultant um actually had a workshop that in California that they asked all new members to attend it was a five-day uh um conference on fiduciary responsibility and education so you know the members that have been on the board and we have those that have experienced that education um so I think it's it's really important to to build on what we have keep the board current VPIC board small um I'm in total agreement with the experience study moving to three years I'm in total agreement of trying to make this an independent um entity VPIC an independent entity and and that transition and how to do it thoughtfully I think the governance study that Tom talked about is fantastic and our board would definitely support that so and the unintended consequences of moving now um so I think it's all been said and I I agree with with both the treasurer and the chair of VPIC in terms of their highlights and how we should move forward with that. Thanks John um questions from committee members I know it has been a long morning um when when the committee members aren't diving to raise their hand as soon as there's a moment so um I do appreciate your focus and hard work committee members and thank you for the folks who are with us to share their insights I know this has been a long conversation um so Roger do us bringing up the bringing up the the the caboose here on this train um uh from the the state employees retirement system board so thank you thank you madam chair can you hear me yes we can wonderful I I agree with you I hope I'm not being last and least us to testifying before this committee however I want to thank you for inviting me back to testify uh I would like to remind you uh or make you aware that uh I'm having a problem with my laptop I brought it to the computer hospital two days ago and it was diagnosed that it's dying a slow death and what it does is it disconnects me from the wi-fi so if I lose you I apologize and I will do my best to reconnect with you as fast as possible with that said uh I would like to try to keep you within your time schedule and limit my testimony and focus it on the proposed pension government changes that your you and the vice chairman have submitted as of yesterday and I would like to respond by saying that uh given my 30 years of experience uh on the board uh I would have to say that I would personally uh opposed to what's being recommended in the report relative to the creation of a Vermont retirement commission and I say this for several reasons one is I believe that it would make the overall process of best practices in addressing the uh all the factors and concerns that apply to the pension system more difficult and cumbersome and I feel that creating this commission would add more people to the process and complicate the process even more secondly I feel that based on my preliminary review of your report it would appear also that it would counteract the objective one of your the objectives that you have outlined in your report in streamlining the decision-making process around changes to the actuarial assumptions I think it would make that more complicated as well and more difficult to deal with the the third reason I would say is that I would like to address the board itself it uh I feel that I testified earlier in your committee and talked about how the state retirement board being made up of eight members has a excellent mix of membership that that makes up this board and that this the makeup of these membership bring a lot of professionalism to the board a representation from all the various categories that apply to the pension system and representation from the governor's office representation from the taxpayers representation from the active employees and myself as a retiree and given all the experience that these members have is that they bring the experience of financial management employee management health care management actuarial experience and dealing with that and a lot of experience is also available to us from the staff that the treasurer has brought in in her office we have the chief financial officer and his staff we have the director of investment in his staff we have the director of retirement and her staff these people are all there to assist the board and provide assistance to the board in the decision making process I think we are very fortunate to have this structure setup that helps the board and it advises the board to make and make in the decisions that we make we recognize the difficulty and the challenge that we face and the decisions that we all make but overall I have to say that in all the years that I've been on this board I think the current makeup of this board and the members the current members that we have on this board at this point in time work very well together as a team we question especially like the actuarial report we question the data and the information that is provided to us we try to develop a comfort in what we understand and the decisions that we come to in responding to the actuarial and experience studies that are done and brought before the board and with that I would if I was to make a suggestion and I think Tom alluded to that and I think John just alluded to that and probably others as well I would I would also recommend that the uh an ex experts in the field of board governance be brought in to review the makeup of the board that I just described look at the professionalism of the people that are on the board look at the experience and the training that is available from all the members that are on the board and also probably the experience that we have available to us from the treasurer's office and see what they come up with with a recommendation to this committee I I think it would be very helpful and serve the committee well I would I would like and with that and keeping my testimony fairly short which I will explain I would like to summarize my brief comments by saying that the yesterday your report was first released and received by everyone uh released by both the chair and the vice chair of this committee and presented their recommendations on the pension system the retirement board has not had the opportunity to review and discuss the committee proposals this will be ultimately taken up as a priority at our next board meeting uh as chair oops as as chair excuse me I don't like it now however as chair of as chair of the of the state retirement board I believe at this time it is premature uh to further comment on the committee's proposal before the board convenes and discusses the committee's recommendations in closing I would also like to say that I do appreciate that this committee has taken the this issue very seriously and look forward to working with you after the entire retirement board has had the opportunity to review and discuss your recommendations and I also would like to add that I echo much of the comments that John Harris has just made relative to uh board the existing board that are that are currently available in decision making process on the retirement system and that pretty much concludes my limited testimony at this time until our board gets the opportunity to also weigh in on this matter I thank you thank you Roger Mark Higley has a question thank you madam chair Roger you may have said it but when is your next board meeting we normally be on the second thursday of each month uh the executive secretary of the board uh Eric Wolfs Wolfing is uh the one that finalizes that this uh board meeting and at this point in time we haven't been informed if that date is has been confirmed yet because it is given the the situation that we're currently addressing is that uh the the it is a strong priority that all members of the board be available to address this situation thank you Roger thanks again for for being here today you're welcome committee other questions for Roger all right um before we do a few announcements uh Mark Crowe has his hand up yeah I'm sorry just one one quick thing and that is if you are going to stick with VPIC and that really wasn't the focus of my testimony but if you do decide to do that I do hope you consider adding um some another member um with experience and or uh a another independent advisor whether that's someone who represents the taxpayers if you will I only say that because right now the current composition there's basically only two purely independent uh members there is a third there's a third that's appointed by everyone but they have no voting power so I just hope you take that under consideration thank you so I want to extend a big thank you to all the folks who uh who have stuck with us through a long conversation this morning um and a lot of good nuggets of information and wisdom on um on pension governance um look forward to continuing this conversation in the coming days and weeks um and so that is the end of our committee hearing this morning um committee members we have uh a decision point ahead of us in terms of uh how to make adequate time in our public hearings that are upcoming um and so we are currently at 130 something people who have signed up for our hearings and um we really only have capacity for about 35 people each night and so the question is uh would you prefer that we um ask folks to stick to two minutes and uh and that essentially gets us um up to about 50 people per night would you be willing to add an extra half an hour to the monday meeting in order to accommodate more voices or or both uh those are the two options that are ahead of us the the speaker has uh has recommended that we not um try to add a third public hearing night so committee the question is do we want to uh shorten the length of time that people speak uh or lengthen our evening or both and bob hooper uh thank you madam chair unfortunately as after i put my hand up you just said that my suggestion was not uh in favor i i think we're hearing from vermonters on a very important issue and quite frankly i don't mind investing another night at minimum i would not object to extending um two minutes is kind of a short thing i think a lot of people are going to say don't do this to me and that'll get very repetitive but that's why we're here and we hear that about guns all the time um either mechanism for moving forward uh would be better than cutting it off at what it is now i suppose i'm very sensitive to hearing people's opinions i think that's what we're here for and as a big gun owner i said that as a big gun owner Peter anthony uh thank you madam speaker i i want to stick with the three minutes i'm glad that extra time is being added on the monday uh i'm not sorry it's not being added on the friday i have to tell you but i wonder if channeling uh or directing as again between governance and the benefit package would help um direct people to avoid the don't do this to me which is not information per se uh i i'm not sure how you would structure that i would i would delegate that to yourself and the vice chair to sort of figure out whether we have a half hour on governance and a half hour on don't do this to me uh i'm not sure but it seems to me focusing the feedback would be very helpful thanks mark yeah i i i disagree with the three minutes i i think uh two minutes is plenty i know other public hearings that uh i i've been at it's it's pretty much because of the numbers uh limited to two minutes uh so i would be in favor of the two minutes and if another half hour would uh fit all those folks in then then i would be appreciative of that i i hope though that in the future that the committee is at least made aware or to discuss a few minutes when these public hearings might be i mean it's great that the speaker or or whomever uh figures out these times and dates but uh we also have commitments as well as committee members and i think it's important for you to consider our other commitments as well thank you tanya behovsky thank you um i would certainly support extending time on monday and i will also say that i'm hearing from many constituents that are unable to sign up because they're being told that it's full so i would sort of push back against the idea that we shouldn't have an additional day i think these are changes that stand to impact thousands of people across our state if not everyone given the the work that these essential workers do and we owe it to do the due diligence to hear from all of them uh so yes we do have um we do have a mechanism where people can submit written testimony as well if they were not able to sign up um and uh you know i do need to defer to the speaker who negotiates the availability of um staff time uh in order to support us when we do uh these big public hearings so uh we will continue this conversation um but for the time being um i think let's book an extra half hour on monday and plan that meeting to go four to six thirty and um and we'll see uh how it breaks down in terms of how we can encourage the folks who didn't get a chance to sign up um to be able to share their thoughts with us so thank you for your hard work this morning committee um we are done now for this morning and i appreciate your uh your hard work and attention to these difficult topics peter yes thank you one thought i had after the division of the opinion about two versus three you could if you stick with three could say we'd appreciate people to testify on governance for a minute and benefits for two or something like that so that you you get some diversity uh if you will across the attendees thanks all right um i understand that floor is likely to be long this afternoon um so it is unlikely that we will get back to committee today and so it has been wonderful working with you all and i'll see you in committee tomorrow morning


Alrighty, let's go and check out this little shot. Wasn't that just magnificent? I was worried it was getting a little dodgy in the mill part, but then that finale. Wow! Alright. I have some concerns about some of the moves. Wasn't that just magnificent? So there are a couple things. A, you are in this pose here. Wasn't that just magnificent? And doing all this, this is a bit less than a third, almost a quarter. There's a lot of repetition. There's really nothing going on besides that. And then you repeat this whole thing. I know there's a kind of the rhythm to the clapping. Wasn't that just magnificent? But maybe there could be something where... I don't know, I'll just be pulling here. Maybe he's upright. And at the end he is there. And maybe throughout the whole thing also the head and the body. The head goes left and right and bobs while still keeping the rhythm of the clapping. Something where there's a bit more contrast going from A to B or the opposite. Or this and get straight up, whatever you want to do. But I would try to get something a bit more contrasty so it's not always the same. It's like that for quite some time. The second thing is, and this is an overall thing. I think you have a lot of body moves that don't really reflect the... Basically there's nothing in the voice that reflects that move. Meaning that if you listen to the voice... I know he inhales here. So that could work, actually to be honest. But this... Even there's a tiny bit of a break. The voice doesn't really sound as if someone was jumping like this. There's no strain in the voice. Even this, that's a crazy ginormous jump towards camera. Which in general I'm not sure. Again the voice doesn't quite match this. Then again, to be honest, to me this is not very uncommon. I mean in movies, since people are being recorded in a booth. They don't really match the energy on screen anyways. I see it a lot and it's not like people complain about it. I was very picky about this. But again, to me this is the contrast. It's a bit flat here. Even though I like the action. I would just push this. This I like. I just be careful. You're gonna need more breakdowns. You're gonna have to flesh this out. This is gonna be very fast and zippy. Which you can. I'm not saying you cannot. So if that's your style, you can get away with some interesting timing. I was worried. I was worried. And it does work throughout the inhale. I would just look at. Easy starting this with one frame. Like a foot goes up as the anticipation there. Or the body does this whole thing. But it still twists it in the head. It's still looking at us and it's really a big ginormous twist. So you might be able to push those breakdowns and in between. And do something really cool. I was worried it was getting a little dodgy in the mill part. But then that. Just to me it is. In the mill part. But then that finale. I guess you could kind of get away with this. Again, I'm being picky. But on the first time I watched this. This was already slightly suspect. And this going, wow, this doesn't really match the voice at all. But then that finale. And I know this is again, it might be very subjective. But I like the actions like that he goes back. I like the interaction with this. And it's interesting that he goes to all those different places. I think mechanically it's all very interesting. But then this feels. It just feels to be overanimated. It's like with the cross-eyed face. And this big jump towards camera. And not quite matching the voice energy. And to be honest, not a massive fan. But I'm not saying it's wrong. So that was just my impression seeing this. I'm not a huge fan of this. But that doesn't mean you need to stop and change it. So it's kind of a wishy-washy critique. But there is more energy in the voice. That's some hesitating in my being too picky about this. The first impression was, oh, it doesn't work. And the more I listen to it, maybe it does work. Maybe I'm just getting used to that voice. Anyway, that's the main thing. Probably the most actionable things would be I would add more contrast and change in the posing. It's not so flat. Work on your ease out of this and what's going to lead first. Again, it could be fun to just have that leg go out and then do a twist. And the head stays put. You know, push that timing. It could be fun. He's getting a little dodgy in the middle part. But then that fun. Yeah, again, I think I'm just going to leave this being slightly subjective. Personally, I feel it doesn't too much energy. There's that so much movement in the body with the jump, albeit there'll be a slight change in the voice, especially at the end. Well, let's pretend we're keeping all of this. This just seems so presentational to camera, which I mean, he is talking to camera, but it's just something about this that it's such a big jump. I really don't hear that in the voice. But like I said, it's not uncommon. It's not like it doesn't happen in movies either. So I'm not sure how helpful this critique is. I think the beginning is the biggest thing where I feel like, no, this is something I think I would really change because it seems kind of flattened. It's very repetitive for a long time. And the rest is kind of like, you know, let's email about this. You tell me how much you love this. And what your thoughts are. What do you want to keep? What do you want to do? And that's for that. And you do have another shot here. Let's listen to this here. No, no, no, no, no, no, no. This is bad. This is very, very bad. This is really bad. This one, I like this because it makes me wonder like, what is going on the back? But then the rhythm is always the same. So I would try to have a little bit of a change already in there.  But it's almost like all this up and down, up and down, up and down, and then that inhale and then this. I feel like you almost want to have more energy and maybe arms go out, a little shaky, maybe wiggling the fingers and maybe some head shake, just kind of letting out that energy or getting more psyched up to be into this or a bigger on purpose opening and breathing and heavy breathing to feel like he is out of breath here. So it feels like we're starting off cool, then we kind of lose that energy, then we go into higher energy again. This is very, very bad. This is really bad. And then watch out. This is very, very bad. This is really bad. Also a bit even in timing. So it'll be one, two, wait, three, even stepping four, I guess. So one, two, pause, one, two, or one, two, three, pause, one more before that. It's a bit of contrast in timing. This is bad, this is bad. And watch out, even as you, even this arm is a bit different. It has a slight post-to-post twinning feel here. So just watch out for that as you continue on to offset these. This is really bad. That's all cool. And even this here, I like the pang pang, but it could be in combination of pang pang and an adjustment. So it's not just, I'm just moving arms feel like you need a bit more because you're swinging up and then it's kind of constraint and now the root is not moving.  And then as he finishes that pang pang, it settles into that position there. I would add a bit more detail there. And then my question is, who is he doing this to? Is there someone off-screen? So it's a guy on the set. This to me seems like, what's going on? He looks over and then sees the arrow. Even though I know he's looking here, but it's a bit small. I should have made this bigger. But for a moment I thought, wait, is he looking here? So he must be looking at someone off-screen. But then, yeah, I guess why not. Hold on. This is very, very bad. This is really bad. Yeah, I mean he is looking above that arrow. Maybe, maybe sadly pantomime me of, dude, what's up? And then kind of, kind of pointing down. And we're like, hey, can you see this? Something maybe a bit more over. So it's not just, is he looking here? Because, I feel like you want to make it extremely clear that you're gesturing. Well, not gesturing, but having that contact with a crew member. I like this though. And then it looks up. It's getting ready. Something must be happening. And I love this. Okay, getting ready. And not. Oh, come on. And then come on. Crack me up. I still love that ending. Oh, come on. Yeah, so that'll be it. Those are my thoughts on this one. I love that face too. I love that. That's what we see first. What is going on? And then this. Okay, cool. It's cool. I really like that shot. Just a little questions here and there. Maybe some suggestions as always. Take what you need out of that and do your thing. All right. Thank you. All right. There's an email you can sign up. You can start whenever you want. You can submit whatever you want. You get 16 submissions. Either way, a like and subscribe would be awesome. All right. Thank you.