By The Numbers

This Cannot Go On; It Is Time For A Change

$2.3 Billion

Amount of Underfunded
Liabilities in 2009

100% Increase

Amount of Underfunded Liabilities From 2009 to 2018

$4.5 Billion

Total Unfunded Amount for Pension & Healthcare to Serve VT State Employees & Public School Teachers

The Vermont Retirement Fund

The state Retirement Fund is a vital source for many of Vermont’s retired state employees and retired public school teachers.

State employees use the Vermont State Employees Retirement System called VSERS, and the Vermont public school teachers use Vermont State Teacher’s Retirement system called VSTRS, for retirement income and healthcare expense.

These funds are provided by payments from the retirees themselves and Vermont tax money, per negotiated agreements made during contract discussions. The money contributed by both increases thanks to investment.

Unfortunately, both systems have been severely underfunded for years. Liabilities are escalating as obligations for funding from the state of Vermont fall behind each year. The state General Fund is forced to kick in more and more money to fill the gap in these increasing costs. Every year, there is less and less money left in the General Fund to pay for other vital state programs.

We need to get the Retirement Fund back in shape to support itself.

Through a negotiated agreement, Vermont made a promise to retired state workers and state teachers to provide for them in retirement. This is a moral and legal obligation Vermont must keep.

In 2018, there were 19,161 retired teachers participating in the program and 15,504 retired state employee pension participants.

Vermonters share a legal and moral obligation to fund the pension and healthcare plans for retired state workers and retired public school teachers. However, the amount for which Vermont taxpayers are responsible increases every year.

Why does it matter if we fall behind in our state contributions to the Retirement Fund?

The Retirement Fund pays for the pensions and retirement benefits of Vermont’s state employees and public school teachers and...

-There is not enough money in the funds to pay out this obligation.
-Vermont now has a negative net worth because we are so far behind in payments to the Retirement fund. The money we owe to the retirement fund counts as a liability.
-The state’s bond credit ratings have been lowered, making it more expensive to borrow money for infrastructure improvements. That means taxes need to be higher to pay for the cost of needed infrastructure improvements.
-Vermont now has one of the ten worst performing pension funds in the nation.
-Vermont has a moral and legal obligation to make right on the promises made to these hardworking employees.

My most pressing concern with the Treasurer’s Office is the ongoing, severe underfunding of the retirement fund. Payments into the fund from the state have not been sufficient enough to keep the fund primed at a level needed to generate adequate revenue. As a result, taxpayer obligation has increased, consuming more and more of the state General Fund.

The underfunded liabilities have increased by nearly 110 percent in the last ten years: from $1.1 billion in 2009 to $2.3 billion in 2018. Unfunded retiree healthcare plans now exceed $2.2 billion, making the total unfunded amount for pension and healthcare for these two groups of Vermonters $4.5 billion.

Vermont is in big trouble with the Retirement Fund. There is a way out. It took 30 years to get into the situation we face, and it will take time to get out. This cannot go on; it is time for a change.

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How Should Vermont Stabilize The Retirement Fund?

I suggest approaching with these five policy steps:


Explore Cost-Sharing

Find a way to share the increased cost, especially unexpected increased cost, between the state (that's the employer) and the state workers or public school teachers (the employees).


Amortize Health Care Plans' Unfunded Liabilities

The health care plan Vermont is using now does not allow for reducing the state's cost to cover health care costs for its retirees at all. The health care plans should have an amortization plan that follows the pension plans system.


Conduct Rigorous Annual Stress Testing

Actuarial accountants use stress testing to make sure there is enough revenue coming in to pay obligations into the future without putting stress on the sources of income or cutting core services. An old fashioned tried and true method.


Improve Governance and Transparency

It is essential to get the right people on the board:
-get a financial expert or two.
-make sure the taxpayers have a voice.
-union members who are plan participants should hold a majority of the seats.
-use the state conflict of interest rules.
-have a standardized process of choosing rates of return and investment assumptions.
-prohibiting investing that is based on political or social agendas.


Create an Alternative Pension/Retirement Plan for New Employees

The defined benefits style of retirement does not work anymore for everyone. The alternative plan for incoming employees must follow defined contribution plans.

Notes & Next Steps

These steps were, in part, suggested by members of the Vermont Business Round Table in their December 2019 report: Policy Options for Vermont State Employee and Teacher Pension and Health Care Retirement Systems. The information was distributed to the legislature and the administration.

These steps can and should be used as a start to stabilize Vermont's Retirement fund. It will take a lot of work. Change is never easy, but Vermont cannot allow the current system to continue taking more and more from the General Fund each year. I will lead the Treasurer's Office on a path to take care of Vermont's money, ensuring its safety and advising on investments that will generate the best return long-term.

The VT Retirement Fund: Summer 2020

Important: Please watch, read & contact me. I want to hear from you ~ Carolyn.

In 2018, there were 19,161 retired teachers participating in the program and 15,504 retired state employee pension participants. 

We need to get the Retirement Fund back in shape to support itself. 

Questions, Comments, or Info? Please Contact Me!

I Want To Hear From You ~Carolyn

Paid For By: Elect Carolyn Branagan (Chris Branagan, Treasurer)

1295 Ballard Road
Georgia, VT, 05478, US

2020 Campaign Information

From Carolyn: On May 28th, I filed papers in the Secretary of State’s Office to run for Vermont State Treasurer. A major reason I am running is my concern over the huge shortfall in the state’s ability to pay for the retirement of state employees, teachers and municipal workers. More coming from me on this and other issues soon.

© 2020 Paid For By: Elect Carolyn Branagan (Chris Branagan, Treasurer)