House Speaker Jill Krowinski (D-Burlington) has shelved plans for sweeping reform to the state’s teetering pension system following fierce blowback from public employees and the erosion of support among Democratic leaders.

Krowinski announced Friday morning that instead of pushing changes that would increase costs and reduce benefits for most of the state’s 17,300 state employees and teachers, she would instead form a summer task force to explore the issue further.

“It's clear that people are struggling with how to find real systemic change to resolve this crisis right now,” she said.

Instead, lawmakers would focus on changes to the governance structure of the pension system in an effort to improve the anemic investment returns, which, along with losses from the Great Recession, have contributed to an unfunded liability that has ballooned to $3 billion. When health care and other long-term costs for the state’s 18,500 retirees is considered, that number swells to $5.6 billion.

The legislative back-peddling followed a blistering response from public employees to the idea that they would need to pay more and work longer to receive less generous benefits as part of a plan to save the system.

Proposed changes included hiking contribution levels by 1 to 2 percent, limiting cost-of-living increases in retirement, and requiring many employees to work years longer — until age 67 — to receive full benefits, well up from the 62 to 65 ages now common.
Some workers who started their careers early said the changes would force them to work a decade longer to receive full benefits. Though presented as a mere starting point for a conversation, the plan prompted Democratic leaders to begin distancing themselves from it almost as soon as it was presented before the House Government Operations Committee.

Senate President Pro Tempore Becca Balint (D-Windham) said she was troubled by the proposed increase in the retirement age, and Lt. Gov. Molly Gray said the proposal “represents a broken commitment” to workers.

Former governor Peter Shumlin went even further.  In a Friday morning Tweet later deleted, Shumlin called the plan “an immoral, inequitable and unjust solution.”

The plan was a response to accounting changes that tacked an unexpected $97 million onto the bill that the legislature has to pay next year to fund the pension system, bringing the annual total to $316 million.

Krowinski stressed that she remained committed to reform even as she was pushing it off by a year. She said the task force would meet over the summer, and deliver recommendations on policy changes and “and possible revenue sources” by the fall for consideration by the legislature next year.
“We cannot ignore this situation any longer. We must act. We must stabilize our pension system so that our hardworking state employees and teachers can retire with peace of mind,” Krowinski said.

While the task force considers ideas, Krowinski proposed holding off on a plan to infuse an additional $150 million into the $5.3 billion pension system. The state funds, which she said were freed up due to the infusion of federal COVID-19 dollars, would be “held in reserve” until next legislative session.

The challenge of meeting remotely had contributed to the difficulty of finding consensus on the issue, as had Gov. Phil Scott's lack of participation to date, Krowinski said.

“There is no question we need him at the table,” Krowinski said of Scott.

At a Friday press conference, Scott said he had been talking about the pension problem for years, but that it was the problem of  “the majority party” to solve.

“I don’t want to be the main course, but I will be at the table,” Scott quipped.

Scott said he knew “more than most” how challenging it can be to “take up a controversial issue when it upsets our own base and your own supporters.”

“I am encouraged to hear they are still willing to have the discussion because it has to be dealt with,” Scott said. “This is the time to have some courage and stand up and do what you know is right for our state.”