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What's Going On With Vermont's Pensions?

A person stands with a sign reading: A pension is a promise, do the right thing, in front of a grey building and a dozen other people surrounds them
Angela Evancie
Liz Demas, a Williston Central School art teacher with 44 years of service, protests proposed cuts to Vermont's public pensions at a rally at the Vermont Statehouse on Saturday, April 3.

Vermont’s underfunded pension system has forced an awkward question: If the state makes a promise to its workers, does it have to keep its word? And just how urgent is the problem, anyway?

Brave Little State, VPR’s people-powered journalism project, takes up these questions and more in our newest episode. Our show answers questions about Vermont that have been asked and voted on by our audience, because we think our journalism is better when you’re a part of it.

Our latest winning-question asker is Jon Cherico, of Waterbury, who asked: “What’s going on with state employee and teacher retirement funds in Vermont? Is a career in public service smart for young Vermonters?”

Note: Our show is produced for the ear. We recomend listening if you can! But we also provide a written version of the episode below.

Subscribe to Brave Little State for free, and never miss an episode: 


About a year and a half ago, Jon Cherico moved to Vermont from Oregon, where he’d been working for a private timber company. The 26-year-old had taken a job with the state, working for the Department of Forest, Parks & Recreation.

“Basically what I do is help Vermonters with forest health and wildfire issues within central Vermont,” he says of his new position.

There were some trade-offs with the career change. Going from private industry to public employment, you definitely make less. But Jon saw the perks.

“I decided that, you know, taking a pay cut and coming to Vermont to work for the state had a lot of benefits,” Jon says. “It was a ‘quality-of-life tax,’ is kind of what I called it, taking the pay cut.”

Great place to live, solid health care. And something else that sounded pretty great to Jon: a pension. The average annual pension is around $21,000 a year. For the rest of your life. With a cost of living adjustment, to keep up with inflation.

And the pension was kind of like the selling [point],” Jon says. “It's like, you work a 40-hour week, the job's done, and then when all is said and done, you have a good pension and you can retire comfortably and pursue other walks of life at a pretty decent retirement age.”

A couple stands side by side smiling in front of a building
Credit Angela Evancie / VPR
BLS question-asker Jon Cherico, of Waterbury, with his partner Emily Chinn. Jon wonders if his decision to leave the private sector for a job with the state was the right call.

Fast-forward to this past January. Winter is a slower season for a forester, so John was working at his desk — at home, because of COVID, “and I saw that there were changes proposed.”

Changes to that pension that Jon had been so enticed by. Beth Pearce, the state treasurer, was floating some potential cuts.

“Significant and painful recommendations for the benefits structure for both the state and the teachers plan,” Pearce told Vermont Edition in February.

Her recommendations were manifold, and included: “Some reductions and/or eliminations of cost-of-living adjustments for active employees upon retirement...Increasing the year used to calculate the average final compensation ... Pushing out the years of retirement … And increasing employee contributions.”

Basically a grand tightening of the belt, with teachers and state employees like Jon getting, I think it’s fair to say, a worse deal than they signed up for. Now, Beth Pearce said something had to be done, because the pension fund right now has billions of dollars in what are called “unfunded liabilities.” We’ll get more into this later, but basically it’s the estimated gap between how much money the state is going to owe retirees in the future, and how much the pension fund is actually going to have.

And that gap is growing.


“The recommendations are not submitted lightly, but with the recognition that action is needed, and we need to continue to provide retirement security for all our employees,” Pearce said.

Again, these were just recommended cuts. But Jon is following the news, and he’s thinking to himself: Leaving the private sector. Was this the right career move?

“Like, did I make the right call? Can I afford to do this, I guess,” he says. “Like, I'd love to be a state employee and I think I will continue to be a state employee, but financially it's hard.”

And Jon says it’d be hard to save more on his own — because living on his state salary is already kinda tight.

“I'm housing-stressed. You'd think with — you know, I've got a master's degree, I'm experienced, I've got everything I need, and I'm still struggling to afford Vermont,” Jon says. “And I know I'm not alone. I mean, I've talked to coworkers about this issue. It's a little scary right now. I guess it's just like, does this equation shake out?”

Some context

This was one of those BLS questions that became a fast-moving news story.

Before I knew it, I was at a crowded protest at the Statehouse, listening to public employees unleash profanities about the legislative process.

“I don’t give a sh-- if the governor vetoes it. Whip the freakin’ votes. Do your job and override it!”

“The time for rank-and-file union members from all of our unions to be united, to speak with one voice, to be unafraid to stand in solidarity with each other is now!”

“No cuts. No more additional years. No concessions. Stop the bullsh-- and get to work.” 

Two images side-by-side. In one, dozens of people stand with signs reading 'a pension is a promise.' The second photo a person holds a red sign reading 'promises promises please keep yours'.
Credit Angela Evancie / VPR
Public employees protest proposed pension cuts on April 3.


One of the speakers at the rally was Jen Ellis, a public school teacher with a masters degree in education. She also happened to make the mittens that Bernie Sanders was wearing when he went viral earlier this year. Ellis wasn’t very teacher-y or mitten-y at this rally. She was pissed:

“Don’t pat me on the head and say ‘Oh yes, we know you’re important, but we can’t afford to honor our commitment to you.’ That is a cheap lie!”

To understand how things escalated so quickly, we’ve got back up and give some context. Maybe you followed this story as it unfolded (in which case, feel free to skip ahead). Or maybe you are coming to this topic cold, as I was when Jon’s question won.

The first I learned while reporting this story is that there is absolutely no shortage of acronyms in the complicated system that is Vermont’s public pension plan: ADEC, OPEB, COLA, DB, DC, AFC, AAL, UAAL...The list goes on.

And I hope this isn’t journalistic malpractice, but I’m going to try to answer Jon’s question without any of these acronyms.


Something else to know is that this isn’t the first time Vermont has grappled with pension funding — in fact a phrase you’ll often see in coverage of this issue is “chronic underfunding." Most notably, Vermont lawmakers chose to underfund the system in the 1990s and early 2000s, during tough economic times, which resulted in a loss of compound interest. So this isn’t a new tension by any means.

One of the reasons that it flared up earlier this year is that actuaries (basically people who assess financial risk) looked at Vermont’s fund and said, ‘You know what? We don’t think these investments are going to perform as well as we thought.’ And so they recommended lowering the expected rate of return on the fund. And when the people who manage the fund heard that, they agreed to lower the rate from 7.5% to 7%.

And that doesn’t sound like much, right? But Treasurer Pearce says that lower rate of return, combined with increased pension costs, especially as Vermont’s workforce ages, demands intervention. Because that “unfunded liability” that we mentioned earlier just keeps getting bigger. Right now it’s about $3 billion, plus another $2.6 billion in health and other benefits that we haven’t even talked about.

At this point I would like you to please take the term “unfunded liability” and put it on a shelf in your brain. We’re going to come back to it later — because there are people who take issue with this whole framing, and say these billion-dollar numbers actually make the problem sound worse than it is. So more to come on that.

'I just feel so, so mad'

After Treasurer Beth Pearce made her recommendations in January, another pension proposal came out, in March.

It was debuted in the House Government Operations Committee, by Representative Sarah Copeland-Hanzas.

“Nobody likes the situation that we’re in,” said Copeland-Hanzas, the chair of the committee. “But we are looking to try to find the right combination of changes that will make this more sustainable for the General Fund as well as for the retirees and beneficiaries.”

Basically, the proposal put a lot of the pressures on workers that Pearce had recommended. Work more years, pay more money into the system, and get less out in retirement. Overall it was going to cost people who were more than five years away from retirement hundreds of millions of dollars. And the state was going to chip in $150 million as a one-time contribution.

I cannot overstate how much public workers and teachers hated this plan.

“I, for myself — and I think I speak for a lot of teachers — [am] feeling burned by what's happening in the past, but also feeling burned by this process,” Bjarki Sears, a social studies teacher at Middlebury Union High School, told me the week this proposal came out.

(Full disclosure, MUHS is my alma mater, but Sears got there after my time.)

“What was released on Wednesday actually goes farther than Treasurer Pearce's suggestions,” Sears said. “Those things we thought were too much. Now we get even more. I would say the words are hurt; the words are pain; the words are disappointment and confusion.”

“I hate to say it, but it feels like they stole our money,” said Robin Hersey, an IT developer who’s been with the state for 29 years. “[Money] that they were supposed to dedicate to us."

Robin told me she knew people who were retiring early to get ahead of any cuts. And even though she would have been exempted under the House proposal, “I'm not 100 percent sure I'm staying even then, because I don't trust them. I don't trust them from year to year not to change something else.”

“Nobody becomes a teacher to get rich. But it does help to have a fair wage, good health insurance and a stable pension,” Matt Henchen, who teaches civics and social studies at Harwood Union High School, said.

“And so far, I've got 14 years in, and all we have experienced is wage stagnation, increased health care costs and reductions in benefits. So it is tough. And not only that, but as a 46-year-old, I still carry $40,000 in student loan debt, which means that as my son enters college next year, I have nothing to help him with.”

The unions ripped into the proposal — and they said they didn’t like the way it had come together, seemingly very quickly and behind closed doors. Teachers started demonstrating outside of their schools.

And then, the House committee heard from workers and educators directly, on two separate days.

I know we’re all on edge after a year of COVID. But these public employees, many of whom have been working on the front lines, simply could not.

Eric Hutchins: I'm going to throw out my notes here because just two minutes is not enough time, I just need to express to you how I feel. I find it unfathomable that this group of people would consider what they call "stabilizing" the pension fund, not by actually stabilizing it, but by cutting the promised pensions that you made to teachers and state employees.

Marie DeBenedetto: It's hard for me to speak right now because I just feel so, so mad.

Noah Detzer: Whatever you do, you need to stop calling this painful. You don't get to pretend to care about the pain when you're the ones inflicting it.

Jordan Sabataso: ... and now you're ripping the rug from underneath us.

Nora Skolnick: ... and doing it during the most difficult time in our professional careers.

Tevye Kelman: The past 48 hours have made me feel so disrespected, so dejected, so pessimistic about my chosen career.

This is where you could also hear a collective answer to the second part of Jon’s question: Is a career in public service smart for young Vermonters? It came in the form of a warning:

Tom Plog: If someone asked me three months ago, should I become a teacher? I would have said yes. If somebody asked me now I would say, I don't know. Can you afford to?

Debora Killkelley: Our state will not see the strongest teachers working here. Many will leave the profession and fewer young people will pursue it. Our state’s education system will slide into mediocrity and that will greatly impact our economy.


The outcry was so passionate and so angry that just nine days after the plan had been introduced, Speaker of the House Jill Krowinski walked it back.

“We have been listening closely to our constituents and hearing their concerns,” Krowinksi said during a morning press conference.

Instead of overhauling the pension system, Krowinski called for something much, much, much more incremental: a task force.

“I would like them to work over the summer and come back to us in the fall, so that when we get back in January, we have a really good sense of where we’re starting from.”

That, and proposed changes to the governance structure of the board that manages the investments in Vermont’s pension funds, called the Vermont Pension Investment Commission, “to make it more transparent, more independent and bring more expertise to the table to get things done.”

This happened on a Friday morning, April 2. Teachers and public workers had been planning to protest this proposal the very next day, Saturday, in Montpelier. And even though they’d kind of won, for the time being? They still turned out.

This is the same rally I mentioned earlier — and the people here had some messages to send.

One big one was: If the pension fund needs more money, don’t try to get it from us. Just tax rich people:

“Why do we continue to act like we can’t afford to raise taxes on those who can afford to pay more, and the only people who can afford to pay more are working people? Who do these people represent?”

There was also a lot of rage about how any cutbacks to pensions would disproportionately affect women:

“This is an attack on women! Women make up 75% of teachers. This is an issue of equity and justice.”

And you could almost hear political fault lines shifting in real time. Certain Democrats were getting called out for being anti-woman and anti-worker:

“As an Emerge Vermont alum, which is a Democratic political program focused on the benefits citizens gain when women hold office, I am horrified that women leaders in this state like Speaker Krowinski and Treasurer Pearce have tried to go after the teacher pension system.”

“Representative Jill Krowinski, which side are you on? Representative Sarah Copeland-Hanzas — join me — which side are you on? … This is not Republican versus Democrat, make no mistake about it. This is anti-government versus us.”

So, how did things get so messy? It turns out, there’s a completely different answer to the question of what’s ailing Vermont’s pensions.

Not a crisis?

Earlier I asked you to remember the phrase “unfunded liability.” This is basically the estimated future debt of Vermont’s pension system. Vermont’s unfunded liability is billions of dollars, and it’s what everyone references when they talk about the need to cut benefits. The thinking is, if we don’t solve this crisis now, eventually the pension fund will be insolvent.

But there are some who say this isn’t a crisis at all.

“The fact that you have unfunded liabilities does not by necessity, at all, imply there's a crisis,” says Louise Sheiner, an economist and policy director at the Brooking Institution’s Hutchins Center on Fiscal and Monetary Policy.

Sheiner says that the unfunded liability isn’t as bad as it sounds. She compares it to carrying debt:

“Imagine that Vermont borrowed $5.7 billion and put it into its pension plan. So the pension plan was therefore fully funded, completely able to pay benefits. But now it has this debt, $5.7 billion — it's just moved it, right? So what it has to do on that debt is just pay interest. You don't have to ever pay off the debt, you just have to pay interest. So, being unfunded or underfunded ... doesn't mean you can't pay your benefits.”

Sheiner says yes, someone needs to absorb the risks in the market — either the state, or workers. Because of this, many other states have cut a benefit that Vermont workers do still have: a cost of living adjustment on their pension payments, so future retirees can keep up with inflation. But either way:

“States can't really go bankrupt, right? They don't have the legal ability to go bankrupt. So it just means look, Vermont is going to ... potentially have some pressure from their pension plans. And have to either raise taxes or cut spending in the future if things go poorly.”

Matthew Cunningham-Cook is of a similar mind.

“The fact is that over 30 years, these costs are manageable under the current system,” says Cunningham-Cook, a researcher and investigative reporter who’s done a lot of work on pensions for labor unions. “When I say there is no crisis, what I mean is that unfunded liabilities are not the problem that they say they are.”

Cunningham-Cook, who splits time between Brattleboro and Philadelphia, says the same thing as Louise Sheiner, from Brookings: Everybody calm down, the fund can stay afloat with some level of debt.

He also says that the anxiety about unfunded liabilities and the rush to cut benefits is part of a larger pattern playing out across the country.

“Let's be clear, this is a Republican agenda — a far right Republican agenda,” he says, referencing the efforts of a philanthropist named John Arnold. “The goal is to crush public sector unions, to allow Wall Street to have unfettered control over our democracy. And we're seeing it play out at the state level in our little state of Vermont. And it's a tragedy and Vermonters should be outraged about it.”

Calls for oversight & transparency

For his part, Cunningham-Cook wants to point people in a different direction: away from the pension benefits, and toward the management of the money itself.

“The problem is the bottom-of-the-barrel investment performance of the pensions,” he argues. “The problem is risky, untested investment strategies like hedge funds and private equity that operate as black boxes that are not subject to any federal securities laws.”

Cunningham-Cook says there’s not enough transparency into how public workers’ retirement money is being managed. And, he says, the funds themselves aren’t doing that well.

On management: “We basically are just taking the money managers’ word for it. And we're not auditing the underlying performance. So we need a top to bottom review.”

On the funds, Cunningham-Cook says Vermont’s pension investments have been underperforming the market. If they’d been in more conservative, lower-fee index funds for the past 10 years, he says the funds would have made an extra $1.5 billion.

“That's really the crisis here,” he says. “When we look at the investment performance over the past decade, it's a billion and a half dollars in missed returns. And that is real money, unlike unfunded liabilities, which is really fictive and futuristic.”

According to a 2019 analysis from the Institute for Pension Fund Integrity, Vermont had the 44th worst pension performance in the country, compared to a more passive portfolio. 

“So the point is, let's get some transparency in here. And so we, so the public can ascertain exactly what's going on,” says Cunningham-Cook.

This, in a way, is what Speaker of the House Jill Krowinski called for when she proposed changing the makeup of the board that oversees Vermont’s pension investments. (“To make it more transparent, more independent and bring more expertise to the table to get things done.”)

That bill has now been passed by the Vermont House. Lawmakers are also considering a separate “pension oversight board,” proposed by Representative Hal Colston.

“I really believe it’s this oversight piece that hasn’t been in place that has been really a key missing structure,” Colston said in an interview. “And you can look around the country and see healthy systems have this kind of relationship with an oversight board. So that you have experts who are fine-tuning the system and making sure that it can recover from any miscalculations or things that didn’t work out to plan, so you’re making sure you’re making those adjustments to keep it healthy.”

We’ll see what happens next.

I looped back to our question-asker Jon as we were wrapping up this episode. He said now that the weather is warming up, his forestry work for the state is getting busier. And he’s also decided to pick up a part-time job, as a bartender, to make more money.

Subscribe to Brave Little State for free, and never miss an episode: 


A thin grey line.

Thanks to Jon Cherico for the great question. This episode was made by the Brave Little State team:

Reporting: Angela Evancie

Digital production: Myra Flynn & Elodie Reed

Mix & sound design: Josh Crane

Special thanks to Paul Cherrier, Beth Rowntree, Peter Hirschfeld, Anna Van Dine and Bob Kinzel. Thanks also to VTDigger’s Lola Duffort and Xander Landen for their coverage of this issue.

Brave Little State is a production of Vermont Public Radio. As always, our journalism is better when you’re a part of it:

Angela Evancie serves as Vermont Public's Senior VP of Content, and was the Director of Engagement Journalism and the Executive Producer of Brave Little State, the station's people-powered journalism project.
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