SmartTranscript of House Education - 2025-03-14 - 9:00 AM

[Speaker 0 ]: And you're live. [Chair Peter Conlon]: Okay, everybody. Welcome to House Education. On Friday, March fourteenth, it's nine o'clock in the morning. We are taking some testimony this morning as we look to vote out our miscellaneous education bill. This morning, we are dealing with what is currently on page eleven of the draft bill, the retirement allowance for interim educators. A little history here. It was a while back that we had a program that was meant to be temporary to allow educators who were fully retired to be return to the classroom or the principalship or the superintendency and work full time and not have it affect their pensions. Right now, there's a rule, I think, that once you hit sixty percent of your earnings, that it starts affecting what you can receive via pension. So there was a proposal in government operations to change that. It's a government operations bill in some ways, education bill in other ways. It's popped back and forth over the years because it affects pensions. Mhmm. So we took some of that language, put it in our miscellaneous education bill, and essentially extends the sunset on the program in the case of what we have in front of us, two years. So we are gonna hear from the treasurer's office to talk a little bit about this and Mhmm. As well as from the Vermont Principles Association, which has been, I think, over the years most familiar with this program and how it was interactive. So do do we have Tim here? Yes. Welcome. If you have a seat up front, that would be great. So the proposal before us is to just extend the program that was going to sunset in twenty twenty five through twenty twenty seven. We'll learn a little bit more about uptake, what it's been like, and there's just really some areas of the state where it has been used in, but most areas where it really hasn't seen much up to. Anyway, go ahead and introduce yourself, and welcome to the House Education Committee. [Tim Duggan]: Thank you very much. This is my first time here. My name is Tim Duggan. I'm the director of the Vermont Retirement Systems in the state treasurer's office. I've been in the role three years prior to that serving as general counsel in the treasurer's office for a number of years. I'm here to talk about the extension of what we refer to as the Act one seventy three program. That was the initial discovery that created this program during COVID emergency times. If I may, first, I just wanted to give you a couple brief notes about the retirement system, the VISTA system. We serve about ten thousand active and ten thousand retiree folks in the state. Our average monthly benefit is around two thousand dollars Our funding, which I'm sure everyone is very keenly aware of, has been improving substantially over the past few years since all the work you did in Act one fourteen in twenty twenty two. At in twenty twenty, our funding level is about fifty percent. We're up to sixty one percent as of the close of fiscal twenty four. [Chair Peter Conlon]: We're on track to [Tim Duggan]: close our, unfunded liability by twenty thirty eight. [Chair Peter Conlon]: So we're [Tim Duggan]: very excited, grateful for the support, and we think that it's a really important, a path that the legislature set us on, that we are committed to remaining on. Alright. We also have an OPEB system. OPEB is retiree health benefits, and that is, less funded because we just started prefunding that, but we went from being in a deficit position to over eleven percent funded as of the recent year on track to close that by twenty forty eight. Just wanted to give you a couple of those high level, bullet points and and, say that, you know, workforce decisions that are made in this committee and elsewhere do have an impact on the pension. So we often think about it as a balloon where it can it can be something at one end, it can impact the other. And so we're always mindful of that interplay between the active workforce and what happens in the pension system. And I always just like to take a plug to remind folks of that here. Mhmm. Act one seventy three, as I mentioned, was passed in twenty twenty two. As presented, it was a response to the COVID times that there were real struggles in school districts. And, actually, before I if I can just also make one disclosure, I also am a school board member in my own local community. I'm not testifying in that capacity here. So sorry. I mentioned that. Sorry. And I'm a parent. [Chair Peter Conlon]: Mhmm. [Tim Duggan]: But so it this was passed to help get through COVID, and it was not particularly well supported by the VISTA's board or the treasurer's office at the time, but it ended up going into effect at that point, and we have been administering it for the past three years. In the first year, there were seven educators that took advantage of the program. In the in the second year, fiscal twenty four, there were five. And in the current year, there were three. So this has, I think, shown that there's not, from our perspective, not a particular need for this program, and it does create some challenges, in the retirement system. One of the reasons why we asked for it to be a temporary program is because we would get pretty concerned about behavior changes. That is to say, if folks started understanding that there is this option to receive both a full pension and a full salary, effectively one point five x what is what a normal salary for a position would be, then that's the kind of thing that can change retirement behavior. Things like retirement behavior are very important inputs to our unfunded liability because those assumptions are what tell us, you know, what we should expect to be paid in aggregate over the long term. So one of the reasons why it was created as a one year program with two possible years extensions was so that it wasn't something to be counted on that could drive behavior. There were other important safeguards built into the, into the program, such as you cannot continue on the retiree health care. You have to switch back to the active school health care. And there were some fees, that are paid to the retirement system, though not equal to the benefit that is paid. So, we learned that this was, potentially moving in the miscellaneous education bill yesterday. The version I have extends the program through twenty thirty one, but it sounds like that's changed since that time. The board did take this up because we happen to have a district board meeting yesterday, and they voted unanimously to not support the extension, concerns of the cost of the program, the cost shift, moving part of a salary into the retirement system. It is a very manual intervention type of administration. Our our system is not designed to have someone be both an active member and a retiree at the same time, kinda trip one or the other. And as I mentioned before, concerns over behavior change. Once a program that was temporary starts getting extended, I think we feel the writing is probably on the wall to a permanent program, and that's where behavior may change. I touched base with our actuaries just to make sure I could understand and represent reasonable costs. At this point, in the scope of our you know, it's we're in the billions of dollars of unfunded liabilities. So this is not moving the needle at the scale. It is currently utilized at. But to the extent it is extended and maybe we start seeing numbers in the, you know, in the twenties, then maybe we start talking about adding to our unfunded liabilities, which ensures a concern for everybody. Those are our initial concerns. But as I said, it was fortuitous that we happen to have a board meeting yesterday, so I was able to bring it to the board. And and the the decision there was to not support. [Chair Peter Conlon]: Yeah. So that that vote was based on an extension to twenty thirty one. The vote was Do you think that vote would have changed any if we were just extending it a year or two? [Tim Duggan]: No. The language was to not support an extension of act one seven three in the future. So it was really an extension. [Chair Peter Conlon]: Okay. Other questions from folks? Would it be fair to say that this has not shown to I mean, the the uptake's very, very low. You said three this this year. [Tim Duggan]: Yes. [Representative Chris Taylor]: So [Chair Peter Conlon]: that sort of concern about behavior has not really borne out with that with that level of uptake? [Tim Duggan]: Yes. They're concerned about behavior. I think that's also because, again, some of the safeguards that it's not known if the program will be extended until the last minute. I think that was intentional. Yep. Mhmm. And yeah. And the fact that you can't sort of sit in a position year after year that if you come into the program in position x, You can't remain in position x for any extension. The idea the idea as presented was always that there's an emergency. Right. The school district is beating the bushes to try and find someone, can't do it. There's one person out there that can solve the problem, and to create that as an as a response to what we all saw during COVID. I think that was the that was the purpose, and I think as COVID has gone away, we've seen that schools have been able to hire. [Chair Peter Conlon]: Yeah. I bet the field may disagree with that because we've lost people on emergency and Yeah. Other licenses. Mhmm. Okay. So the well, I really see two points here. One is extending the sunset. And but then there is removing language saying that you can only sit in one position for one year. [Tim Duggan]: Yes. [Representative Joshua Dobrovich]: Would putting the verbiage back in that requires that you only sit in one position per year and then would have to change position if you wanted to do it for another year? Would that make it more gonna make the board consider be more in favor of it by putting that provision back into it for a short extension? [Tim Duggan]: Based on our conversation yesterday, Alco. Okay. I you know, always careful to speak for a for a body. Right. But the the general consensus was that this was I think and going back through history, this is reemployment, shipping costs of active teachers into the work into the pension system is something that we do try to avoid. So I think the board has historically looked with this favor on this type of of enterprise and some kind of little changes, I think, would probably not have moved the needle in our discussion yesterday. Well, thank you. [Chair Peter Conlon]: Okay. Great. Thank you very much, Tim. Thank you. My pleasure. Okay. Jay, you are up on this matter. Welcome. [Jay Nichols]: Thank you. Can you folks see me okay? [Chair Peter Conlon]: Yes. [Jay Nichols]: Perfect. Full disclosure, I can't see myself on the screen, so it's kinda weird. So I don't [Speaker 0 ]: know. I'm sorry. [Chair Peter Conlon]: You look great. [Jay Nichols]: Oh wow I don't know about that. So for the record Jay Nichols, executive director of the Vermont Principals Association. My testimony today concerns a concept, excuse me, of extending the provision authorizing a beneficiary of the Vermont State Teachers Retirement System to resume service as interim educator and continue to receive a retirement allowance for that period. Full disclosure especially for those who are new to the General Assembly and or the Committee on Education, I worked very hard to make the concept of educators being able to come out of retirement to assume important positions that could not be filled in our public education system for one year emergency situations without them having to lose retirement benefits the law. And I deeply appreciate the General Assembly and eventually the treasurer's office in allow supporting us in in implementing this law. That was the purpose for dedicated retired educators to help out in a pinch so that we could make sure students receive the quality instruction or leadership they needed, as you've heard this applies to retired school principals and superintendents also, but the plan was always for a temporary fix, it wasn't designed to fix systemic problems or to allow an individual to continue in a position and still receive retirement benefits for more [Chair Peter Conlon]: than one school year. [Jay Nichols]: We'd be fine with an school year. We'd be fine with an extension of the law but do not support the suggested language to be deleted that states a beneficiary may only resume service during each one year renewal period if service is performed in a different interim school educator position. In other words, we'd be fine with extending the language under the same conditions as are in current law. However, we do not support allowing the same person to continue in the same position in the same school in consecutive years. This was never designed for that purpose. It's to really help out a system that's in crisis and can't find anybody, and an educator's willing to say, hey. Listen. I'll step in for a year, get you through, but it's not meant to be a post retirement career path for anybody unless they're willing to travel around the state and fill in tough positions. And then if they're willing to do that and the needs there, that's fine. Again, it's only a handful of people. Less people have taken advantage of this than I thought would originally, but the fact that superintendents and school boards have this as an option in a really tough situation, I don't think it's a bad thing. But it should not be a a pathway for someone to continue, you know, working in their same role, retire as a first grade teacher, and then stay in that same system and do first grade year on, year out and dip into the retirement system at the same time. Those are my prepared comments. [Chair Peter Conlon]: Thank you very much, Jay. Questions from the committee? Representative Taylor? [Representative Emily Long]: I'm just curious on if there could be language from there maybe. Because so I I can see where maybe one year in a position is not long enough to, you know, help the help the need out or help us fill out. Do we put in language that would maybe restrict it to two years in the same house? [Jay Nichols]: I mean, ultimately, that's a policy decision. It's up to you. But, again, when I envision this and I and full disclosure, my second year at the VPA, and I've been here eight or nine years now, I pushed for this bill and it took us several years to to get it through and it was largely in response to unfilled positions and seeing some places that were in real crisis where they couldn't get a first grade teacher. And they would ask their former another elementary teacher in that district that retired, will you come in and do it? And they were like, then I I I I retired. I wanna be retired. You know, I do it to help you out, but I I I'm actually gonna get hurt out of it in my retirement. I don't wanna do that. So it really was meant to be a one year thing, and I really hate to see us deviate from that. I actually agree with a lot of the positions that the treasury department's, talking about here. I think as a one year emergency, I think it's fine. I don't think it rocks the system very much. But we've got our system headed in the right direction, and I I don't think we should mess with that, personally. [Tim Duggan]: Yeah. Just as a [Representative Emily Long]: follow-up, I you know, with the amount of provisional and emergency licenses out there, I would still say we're in a crisis. [Tim Duggan]: And I would I would [Jay Nichols]: I don't disagree in the crisis part. Toll totally agree, and that's why I think if you wanna extend it the way that it is, representative Taylor, I I think that's that's fine. [Chair Peter Conlon]: Harkel, then Dovovich. [Speaker 0 ]: My question is related to representative Taylor's, which is, I guess, sort of, is there a way that we can say that you know, I think it could go on for more than a year that we don't find this position that you no longer are guaranteed the job after a year and have to reapply. But, like, if we still don't find someone, it's fine for you to reapply, and we will hire you and have that consistency in the classroom knowing that if someone shows up that that position could end. Is there a way to handle language like that? [Jay Nichols]: That's our [Representative Chris Taylor]: You're definitely that's [Jay Nichols]: a good question for Beth St. James. [Tim Duggan]: Yeah. This is here. [Chair Peter Conlon]: It would I mean, the way it's written right now, it'll it would allow somebody can say the way the the proposal is in front of us, it would allow somebody to remain in the position for more than once. Mhmm. [Representative Chris Taylor]: And she has enough energy. [Jay Nichols]: So Just worry about a system not working hard enough to bring new members in and and really hitting the bushes to find people. In some ways, it almost have somebody rather somebody have provisional license if they're work actually working towards permanent license share, then they're gonna be in our system for the next thirty years. They're gonna pay into our retirement system. And, you know, we need to be careful when we tinker with the retirement system. I I I it makes me nervous. [Speaker 0 ]: Right. I I mean, I don't wanna de incentivize administrators from working hard to find people. I feel like, you know, that could definitely happen that they don't they stop really looking if they don't need to. At the same time, if we have seven and then five and then three people that have taken advantage of this, I mean, are we sort of manufacturing a problem that doesn't really exist if it's gonna be, like, one or two people that are double dipping in the entire state of Vermont? [Chair Peter Conlon]: Well, that's the question before us. Josh? [Representative Joshua Dobrovich]: So the regarding what you're talking about, mentioned, the concern that once something is extended, does it continuously get extended until it becomes permanent? [Speaker 0 ]: Right. So I'm [Representative Joshua Dobrovich]: gonna ask a question. Being the naive newer legislator who doesn't know how some of this works, is there a way to put a provision or something in there so it cannot be extended again? [Tim Duggan]: Yep. Definitely. [Chair Peter Conlon]: Future legislature can do it. Okay. [Representative Joshua Dobrovich]: I didn't think so based on previous conversation with those council. I figured that He's after. [Chair Peter Conlon]: You can put in guidelines Right. Like a sunset, which we have. Okay. Go ahead. [Speaker 0 ]: It's not really a question, but I do wanna just echo what I heard Jay say. We did a lot of work on the pension system. We have it moving in the right direction so that it's there for teachers for decades to come, and I don't think we should do anything that's gonna screw with it. [Chair Peter Conlon]: So I think one of the concerns is probably at the higher leadership level that when you have an interim superintendent and you're in a superintendent search phase and you fail, that this is a way to be able to sort of continue on one more year with a retired person as your interim while you try to fill that position fully. It's a situation I've certainly been in as a school board member. So I think that's one of the areas of concern. Yes. Let me give our witness chance to respond if if he would like. [Jay Nichols]: Yeah. Not nothing that you've said changes my my thoughts on this, chair. [Chair Peter Conlon]: Yep. Thank you. Emily, do you have a question? [Representative Chris Taylor]: Yeah. Related to that, do we know whether it's teachers or administrators who are taking advantage of the seven five, and three? Do we do we know? I don't think so. I don't think we need to know fully. I mean, that that's that's news to me, I guess. That I mean, I I've actually been in that position as a school board member where we couldn't find it and and and ended up having a retired person from out of state Right. Coming. So that's a very real state. It's a very real issue. Yeah. I I agree with that. But, I mean, what we're what we are have been talking about and and why we were talking about extending it is because of that crisis that [Tim Duggan]: we were talking about. Yeah. [Representative Chris Taylor]: And and I I I'm not opposed to considering extending it for the same reason for one more year, but I I I I guess I'm not comfortable with changing the language from the way it [Tim Duggan]: was prior to that. Yep. [Chair Peter Conlon]: Colin, did you wanna say something? [Colin Robinson]: If I may. [Chair Peter Conlon]: You may. Yes. We can [Speaker 0 ]: introduce yourself. [Colin Robinson]: Sure. Colin Robinson, Vermont NEA. Of course. Yeah. Just to the and I defer to the retirement division. But just as a point of information, teachers who retire, whether they're in an administrative position or a classroom position, can reenter the classroom if they so choose to right now. They just can no longer receive their pension. So what we're talking about here is a very specific scenario where somebody's still receiving their pension and having this sort of temporary full employment. So I recognize sort of the the point that you're raising, chair Conlin. But I think in that type of scenario, if there was somebody who's willing to do that, they could actually step out of retirement for that year and serve in that capacity. The second point I just wanna make is, you know, the VISTA's board, they're the fiduciaries of the system. They work incredibly diligently, and I know there are some of you who are here for the pension conversation a couple years ago and can appreciate that. I'm sure others watch it from afar. And anytime we do little things, we just have to be really, really careful. So just wanna [Chair Peter Conlon]: I appreciate you pointing out the fact that one can be retired and come out of retirement and are a full salary with full benefits. [Tim Duggan]: So you just basically pause the end token? Yep. [Chair Peter Conlon]: Yep. You pause your pension. [Representative Joshua Dobrovich]: And they stop So [Chair Peter Conlon]: in the case of a superintendent, for example, they could give up their pension, work at whatever the salary is that's offered in that district for the for the superintendent and continue on. And then re resume their pension at retirement. Mhmm. [Speaker 0 ]: Would it change their retirement amount moving forward if they did that? [Tim Duggan]: It's the it's the average of [Chair Peter Conlon]: you oops. Sorry. Go. Yeah. I don't I don't know. [Colin Robinson]: I think we for years. [Speaker 0 ]: We might have an answer on on the wall here. [Chair Peter Conlon]: Go ahead. Go ahead. Yes. Tim or Chris, either one. Yeah. [Tim Duggan]: Yes. Tim Duggan, what would happen is the pension would pause. The member would come back and earn a year or however many years they work up service credit, but it would be starting towards a new pension. Now, oftentimes, they wouldn't take the five years that would vest in the new pension, so the result would be they would take their contributions back after they leave, and their initial pension would unfreeze, and they would be back where they were to start with. [Speaker 0 ]: But they would get a balloon payment of whatever they had paid in over the two and a half years they were an interim or whatever. [Tim Duggan]: It would be a return of their contributions. Yes. So that's why we view the comp issue. The compensation needed is pension plus salary, then, really, it's a comp issue. It's not a retirement issue. Thank you. [Representative Chris Taylor]: Okay. Thank you. [Chair Peter Conlon]: Thanks. We're gonna close there because we need to get to the four thirty. Thank you all [Representative Chris Taylor]: who came in. Yes. Bye.

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SmartTranscript of House Education - 2025-03-14 - 9:00 AM

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