Vermont Legislature SmartTranscripts:

[Sen. Brian Collamore (Chair)]: Good afternoon, and welcome into the senate committee on government operations committee meeting of Thursday, April 9. What happened to you? We're gonna take a look at eight five sixty seven. This is our first look at the bill. And assuming we can get through this in the next hour and ten minutes, we'll take up on the bill at 03:30 after we move to. So I don't know, Pat, if you wanna go first or Cameron. It doesn't you guys.

[Sen. Alison Clarkson (Member)]: Yeah. I think

[Rep. Matthew Birong (Reporter/Lead Sponsor, H.567)]: probably, like I was saying, I Sure. Thank you. For the record, representative Matt Byron, chair of house government operations military affairs and reporter of the bill as well as lead sponsor. So I started working in coordination with counsel and the treasurer's office on this back in December. Their staff and our staff had put

[Sen. Brian Collamore (Chair)]: a lot of legwork into the

[Rep. Matthew Birong (Reporter/Lead Sponsor, H.567)]: language, and it's a very technical piece of legislation. It's touching on a range of things from unclaimed property, increasing thresholds. It is reorganizing a lot of sections of law with components that really should be rehomed in other sections. Counsel will do a a better job than I discussing that. It's also moving fiduciary oversight of some of the funds to VPIC additional support with some staffing. I will say the positions that are in there are funded by the funds,

[Cameron Wood (Office of Legislative Counsel)]: so there's no stress on the general fund or or request a public general fund on those.

[Sen. Brian Collamore (Chair)]: Let's see. We

[Sen. Alison Clarkson (Member)]: got

[Rep. Matthew Birong (Reporter/Lead Sponsor, H.567)]: kind of, like, a really soft primer on it. It did move with unanimous vote out of our committee.

[Sen. Brian Collamore (Chair)]: Did take a lot

[Rep. Matthew Birong (Reporter/Lead Sponsor, H.567)]: of testimony on it. There was this the couple the change in ways and means, they offered an amendment as well as appropriations, but it was nothing blaring or jarring to my recollection or perception.

[Sen. Brian Collamore (Chair)]: House floor vote. Noise. Okay. Senator Clarkson.

[Sen. Alison Clarkson (Member)]: So I see you're speaking to us from a joint fiscal fiscal note, which we don't have. And I'm just curious if everything that all the financial implications that were in the bill, did they make it through a budget?

[Sen. Brian Collamore (Chair)]: Yes. We do well. Really?

[Cameron Wood (Office of Legislative Counsel)]: I don't But that's just me. Perhaps it's in

[Sen. Alison Clarkson (Member)]: that pile Right. Right on top of Pile.

[Rep. Matthew Birong (Reporter/Lead Sponsor, H.567)]: I see a fistula note.

[Sen. Alison Clarkson (Member)]: Oh, there it is. I don't. No.

[David Chittenden (Deputy State Treasurer)]: I see another fistula note.

[Sen. Alison Clarkson (Member)]: That is for $5.88. Okay. I know I did my part. I got OPR bills. Anyway. I will borrow John Morley's most fabulous. Yeah.

[Rep. Matthew Birong (Reporter/Lead Sponsor, H.567)]: So I think that's kind

[Sen. Alison Clarkson (Member)]: of like That was really because we're about to do our our priorities, our spending priorities for this committee, and I just wanted to know if that money in this bill made it through the house project. That was really my question.

[David Chittenden (Deputy State Treasurer)]: Just to the best

[Rep. Matthew Birong (Reporter/Lead Sponsor, H.567)]: of my knowledge and recollection, everything is fine.

[Sen. Alison Clarkson (Member)]: That's great. I mean, I don't have to.

[Sen. Brian Collamore (Chair)]: Does anyone else have questions for Matt? Thank you. Cool. I'll hang out for a little We do. Yeah. Cameron.

[Rep. Matthew Birong (Reporter/Lead Sponsor, H.567)]: Always nice to get out of my room. Well, you have a much nicer room. You taller ceilings.

[Cameron Wood (Office of Legislative Counsel)]: It's a little bit more Mine's a little more sterile, but spacious.

[Sen. Brian Collamore (Chair)]: Good afternoon.

[Cameron Wood (Office of Legislative Counsel)]: For the record, Cameron Wood, Office of Legislative Counsel. I do a walk through the bill, but I will be will try to be somewhat succinct because although it's 36 pages, there is a significant amount of this bill that is simply removing language from certain statutory sections and then making them appear in other sections.

[Sen. Alison Clarkson (Member)]: Well,

[Cameron Wood (Office of Legislative Counsel)]: sure. Thank you. Under the retirement systems, part of that, so a significant portion of the bill, is moving the fiduciary and administrative oversight over the state and teachers post employment benefits retirement funds, moving them out from under the, as I said, fiduciary and administrative oversight of the treasurer's office and moving them under the BPIC chapter in Title III. So a lot of this is simply gonna be moving some language in between the different retirement system sections. But before we get there, there are a few other changes for us to walk through. So I'm gonna share my screen, and we'll jump in and get started. Before we get to the retirement system sections, the first few pieces are gonna be dealing with the unclaimed property division within the state treasurer's office. And even though these are substantive changes, they are more technical in nature and amending. I was waiting on the waiting for the document to come back up, amending certain financial thresholds in current statutory language.

[Sen. Brian Collamore (Chair)]: There we go.

[Cameron Wood (Office of Legislative Counsel)]: Okay, so first section, as I mentioned, unclaimed property, 27 VSA fourteen ninety two. This is amending the section about the report that has to be filed to the treasurer's office when unclaimed property is being submitted. The first change is going to be here at the bottom on line 20, allowing for medical insurance policies to be submitted under this section, and then it's giving on the next page, page two, the treasurer's office the authority to require when these unclaimed properties are coming over to require that there be explanation of the benefit amounts that are being provided as well. Get the treasurer's office in who can speak to this in more detail than I can obviously, but my understanding from their testimony previously on the house side was sometimes the treasurer's office gets these just kind of bulk transfers of money over without any description of actually who the money is for, what it's for, etcetera, so this is intended to give them some additional statutory authority to require that information when this unclaimed property is being transferred over to. So first section, relatively straightforward. Now, sections two and three are gonna be one of the more real substantive changes to what you have in this bill. So what this section does is it outlines before the treasurer's office sends over unclaimed property to the general funds, so they receive all this unclaimed property, and the treasurer's office is required to maintain a certain amount of unclaimed property on hand to be able to pay out claims in a given year, they also transfer money over to the general funds, the money that they don't need to maintain, and so this section authorizes the treasurer's office to deduct expenses, charges, etcetera, from those monies, and then the subsection five currently says that if there's any property that's valued at $100 or less that is more than ten years old, that money gets transferred over to the Vermont Higher Education Endowment Trust Fund. What all of this language in this section will do is it will increase the threshold from 100 to 150, and then it will, in the subdivisions A and moving to page 3B, it's going to say that the money will not go to the Vermont Higher Education Endowment Trust Fund. The money will go to the Vermont Retirement Security Fund, which is the fund used to administer the Vermont Saves program. So we're redirecting where the money is going, and then we're putting a cap on it of $300,000 annually. That's important because as you're raising the threshold from 100 to 150, you're going to swoop in a significant amount of money in the first year, because it's all the property that's older than ten years old, and the cap's currently been 100, so everything that's now $50 more than that, you're sweeping it all in, and what this cap would do, the $300,000 cap, it would allow the trader's office to maintain that money and then distribute it moving out years from that first big swoop, it would allow them to slowly distribute that money to the Vermont Retirement Security Fund for the administration of Vermont's SAGE program. So that's really the two big things that you're doing with this amendment here, if it were to pass as it's written, is increase the cap, and then it re diverts the money for a certain period of time. It does, in the subsection B, it allows the treasurer and the treasurer's sole discretion to put money into the Vermont SAES Administrative Fund or into the Vermont Higher Education Endowment Trust Fund. So you're giving the state treasurer the discretion of how to distribute that $300,000 on an annual basis. Treasurer's office has testified, and you'll see it in the fiscal note from JFO, that most of the money would go to the Vermont Saves program, but then over time, it would slowly start to divert money back over to the Vermont Higher Education and down the trust funds. And then section three repeals that diversion of money to the Vermont Saves Administrative Funds in 2014. So then all of the money would go back to back to the Vermont Higher Education Endowment Trust Fund asset. Sorry, did you say 24? 24,000. 24,000. Go ahead.

[Sen. Brian Collamore (Chair)]: Questions on this piece.

[Cameron Wood (Office of Legislative Counsel)]: Like I said, this is probably one of the more substantive changes really changing how current, know, with current statutory lines and stuff. I just want to

[Sen. Alison Clarkson (Member)]: make sure you guys have any questions for me. I'll leave it at once. Okay.

[Sen. Brian Collamore (Chair)]: Understood. Senator Clarkson?

[Sen. Alison Clarkson (Member)]: Just remind me where the the Vermont Higher Ed Endowment Trust Fund, what it's used to support, and what do we carry in it on a balance? What is it a significant amount of money?

[Sen. Tanya Vyhovsky (Vice Chair)]: And it's typically used to support financial aid for students.

[Sen. Alison Clarkson (Member)]: Is it, does it support VSAX grants?

[Cameron Wood (Office of Legislative Counsel)]: I'm not the one to go through that question.

[Sen. Alison Clarkson (Member)]: No, no, was looking at the treasurer's office here, this whole crowd.

[David Chittenden (Deputy State Treasurer)]: Go ahead, David. So it does have three beneficiaries. You're gonna say David Chittenden. Alright. David Chittenden, deputy treasurer. It supports financial aid for low income students. It has $67,000,000 in it currently, approximately, And there's three institutions that use that, which is the state colleges, UVM, and VSAC.

[Sen. Alison Clarkson (Member)]: And VSAC. Okay. Thank you. Thank you. Just we don't see it often in this committee, and so it's

[Cameron Wood (Office of Legislative Counsel)]: So good to be that's section two, again, controlling where this money will be going for the next, give or take, fourteen, fifteen years. Then you have in section three, you can see striking of a lot of that language adding back in the Vermont Higher Education Endowment Trust Fund, so section three, as I mentioned, just kind of a sunset of the change from section two, and that goes into effect in 2040. Then we get to section four, where we have a few additional changes to the Unclaimed Property Division. And what you're doing in section four and section five is you're really increasing the threshold by which the treasurer's office can do a faster claims process for underclaimed money that they're distributing out. What do I mean by that? There are certain requirements that the treasurer has to go through, certain forms that have to be filled out, etcetera, when they're doing a claim, and this subsection B says the administrator can waive those requirements if it meets this dollar threshold of $250 and so the proposal is to increase that to $1,000 Increasing the statutory de minimis thresholds for the treasurer's office to then do more of a quick claims process for unclaimed property. So that's what this section does, and then similarly in fact section, section five is for unclaimed property for deceased owners, and as you can see there in the two and three, it's saying that if the estate has been closed and the unclaimed property is less than $5,000 proposed to increase it to $10,000 the estate's closed and it's less than that amount, they can distribute the property in accordance with the probate's division's decree of distribution. Separately under free, if it's not an open estate and there is no decree of distribution, excuse me, then it can go to the surviving spouse or the next of kin in accordance with your statutory list. So again, just kind of increasing those amounts, just kind of de minimis amounts where they can distribute property based on statute.

[Sen. Alison Clarkson (Member)]: And also speeds it up, right? Correct.

[Cameron Wood (Office of Legislative Counsel)]: Yeah. It would allow them to process the claims much more quickly. Which is great. Similarly, next page, page six, if it is a multi claimant, then it's less than 1,000, the administrator can deliver the property to a proportionate share of each individual, or to the first person who files the claim and owns a share of the property. So again, increasing that threshold. Those are the changes to unclaimed property. Now we're going to move into the retirement system and talk about the retirement system changes for the majority of the remainder of this bill. The first one here is in regards to political subdivisions that participate in the state system, and what this language would do is on page seven, it authorizes the treasurer to provide a penalty, 1% for the amount due for any political subdivision employer that is for payments that are not received within thirty days after the due date. So if the political subdivision is not submitting its share of contributions to the treasurer's office timely, then this authorizes this penalty, and I'll let the treasurer's office explain what the consequences are if you don't have this language under current statute. Next section creates the pension benefits funding task force. Key things here, it's the task force that is to report. There are lines thirteen and fourteen, report on the funding methodologies, the state retirement system and state teachers' retirement system, including the post employment benefits trust funds of both. And then you have membership, chair of the House and Senate Committee on Appropriations, Secretary of Administration, state treasurer, and then one member each from the Vermont National Education Association, Vermont State Employees Association, and the Vermont Troopers Association. I'm not gonna go through this specifically, kind of line by line, it's got a lot of standard language in here. One thing to mention though, we have some detail here on the top of page nine about what the task force here will look at, making recommendations about the funding methodologies of the systems, and then in the sub three here, the task force shall not make recommendations on member benefits, contribution levels, assumed rates of return.

[Sen. Tanya Vyhovsky (Vice Chair)]: So, am I understanding that this task force is to return with ideas about how to create a permanent funding mechanism for this feature, is the state? Is that what this is doing?

[Cameron Wood (Office of Legislative Counsel)]: I don't think so, but I will defer that question to the treasurer's office for a better answer than

[Sen. Brian Collamore (Chair)]: I can do. Isn't the purpose of

[Sen. Alison Clarkson (Member)]: the fund here identified? That's what I was trying to understand, because the way

[Sen. Tanya Vyhovsky (Vice Chair)]: I read that that is what that is trying to do, but that's what I'm now I'm glad I asked.

[Cameron Wood (Office of Legislative Counsel)]: My understanding is it's more, you know, trying to take a deeper look at what the current system is and, you know, making sure that if there are any kind of changes in the economic circumstances between now and when it's intended to be fully funded, that you have a longer runway to make any necessary adjustments to how things are currently being funded, as opposed to some sort of catastrophic event coming sooner than when the system's intent to see it's fully funded under your current projections. My words. Senator Blogg's probably not as technical as the Treasurer's Office.

[Sen. Alison Clarkson (Member)]: I guess I don't understand why the current Board can't do that already. So it's supposed to be a new set of eyes that are different. I mean, obviously it's a different set of eyes, but why can't the current Board that's responsible for the Fund do that? I will let

[Cameron Wood (Office of Legislative Counsel)]: the Treasurer's Office answer your question about why this is important to you at this moment right now. Okay. The next sections, we're on page 11 now. And so everything from here, we're on page 11, everything from page 11 to page 33 is what I mentioned when I first kicked this off in this conversation. There's really no new language in any of these pages. There are a few technical changes or technical corrections based on what's being accomplished, but ultimately, all of the language that you're gonna see struck throughout these sections is either being added or already exists elsewhere, so there's nothing that's being deleted that isn't being added, and there's nothing that's being added that would be new. All of these sections from pages 11 through 33, as I mentioned at the beginning, are intended to transfer over the fiduciary and administrative responsibility of oversight of the state t state employees and teachers post employment benefits trust funds from the state treasurer's office and put them under the oversight of the Vermont pension investment commission.

[David Chittenden (Deputy State Treasurer)]: So that's what a lot

[Cameron Wood (Office of Legislative Counsel)]: of this language is doing. It's striking it from the different statutory sections for the state retirement system, striking it from the statutory sections for the futures retirement system, and then making sure that it exists under the statutory chapter governing weekdays. So here, let me give you your canvas. This section here, section l on page 12, talks about giving the commission the ability to designate a depositary for securities and evidences of indebtedness held in the fund and contracting for the safekeeping of securities. And then the next section, authorizing the commission to loan securities out pursuant to securities lending agreements. That's in the current state employees retirement system. So those two sections are being struck there on page twelve and thirteen. And then They're being added here on page twenty three and twenty four. So same language about the commission being able to designate a depository, and then subsequently, the commission being authorized to loan the securities out. So it's striking it in the state retirement system section, and then it's moving it over into the chapter governing BPIC. And I'm gonna give you another example as we keep walking through. Here on page 14, you have that the state treasurer is the custodian of assets of the funds of the retirement system, so that's being struck because BPIC would be custodian of the assets of these funds moving forward, and now under page 15, you have certain language about standards of conduct, so you see this exact same language in the state teachers' retirement system, the teachers' retirement system, the municipal retirement system, and it references to the commission, so this is the section that says that trustees or employees of the board shall not have any direct interest in the gains or profits of investments made by the commission. They cannot directly or indirectly in any manner use the same, So these are kind of like standards of conduct for the members of the retirement boards. So you're striking reference to the commission or members of the commission because that language is being struck in that section. And then it's added here in the section related to the commission. So it's the same language that's just being struck somewhere and added somewhere else. This is all in an attempt to kind of consolidate reference to the commission, members of the commission, their oversight of these trust funds, consolidating them out of the retirement system chapters, the language governing those retirement systems, consolidating them into the chapter and the sections that govern BPIC directly.

[Sen. Alison Clarkson (Member)]: Senator Clarkson? I appreciate this consolidation. I guess my concern is BPIC is still operating under the umbrella of the treasurer's office. Correct? So that worries me. I mean, I I mean, I I get the consolidation because they're different retirement funds, but I I guess I'm is this consolidation and divorce, or is this consolidation and I mean, I against I trust the treasurer's office fully that we pick forward kinda comes and goes, but the treasurer has ongoing responsibilities for oversight. I guess I'm concerned with this being the VPIC crowd being suffering from treasurer's officers that not what's happening. I mean, I can understand the consolidation. I don't get the removal from the treasurer's oversight. Am I misunderstanding this? Good. Go ahead. So much silence from

[David Chittenden (Deputy State Treasurer)]: the treasurer's office. Just wanna make sure.

[Cameron Wood (Office of Legislative Counsel)]: Tim Duggan directed the retirement systems in the treasurer's office. So BPAY actually was split out from the treasurer's office a few years ago. It was, I think, the year before, act one fourteen. BPay became its own standalone, and so it's a commission. So structurally, there's no change here. BPay currently oversees and is the fiduciary for the three defined benefit system retirement funds, and the treasurer's office, the treasurer is the sole fiduciary for the two retiree health care benefits funds. Those were very small, those funds, a few years ago until legislature started prefunding that the assets are growing rapidly. And with that rapid growth, the thought of this bill is to consolidate oversight of what is now a substantial pool of assets with commission that is that, you know, for lack of a better term, they're the professionals that invest in these stuff. So they're they have systems in place. They have scale to be able to secure better, you know, fund access.

[Sen. Alison Clarkson (Member)]: I appreciate that. I appreciate everything that the commission does. Don't get me wrong. But I also well, top runs it. The I also I guess I'm concerned of who were I I don't know. I guess, like, it it makes me concerned that they're sort of on their own and not under the treasurer's jurisdiction. I have we appreciated that we had separated them out under the wing of the treasurer's office, which honestly concerns me.

[Cameron Wood (Office of Legislative Counsel)]: And to be clear, treasurer is ex officio with VBIC and so is, you know, any partner with VBIC and in burial.

[Sen. Alison Clarkson (Member)]: And VBIC's terms are for three years, and it's all it's it's all clear on who appoints who for that.

[Cameron Wood (Office of Legislative Counsel)]: Yes. Some are ex officio. The terms, I can't remember

[Sen. Alison Clarkson (Member)]: who For unions, like oversight like members.

[David Chittenden (Deputy State Treasurer)]: And the return large members.

[Cameron Wood (Office of Legislative Counsel)]: The retirement boards also like members of the. So there's there's broad representation on the commission and staffed importantly by a professional staff. It's got that right now, a four person professional Right.

[Sen. Alison Clarkson (Member)]: We've added to it recent, in the last few years, I feel like.

[Cameron Wood (Office of Legislative Counsel)]: What I would say is most again, most of the language that you have here isn't as was mentioned, it's not really changing the structure of the relationship between the two entities in any way. And, again, most of this language already exists, and it's just being moved. The key pieces, I think, would be, like, here on page 16. So this is the sections in state employees retirement system creating the post employment benefits trust funds. And so as you can see here under subsection c, the benefits fund is administered by the state treasurer. The state treasurer invests the monies from this benefit funds, may enter into agreement with the commission to invest such monies. So that is being struck because the fund is now moving over, and that fiduciary responsibility would be under BPIC. So Again, in the help of time, I'm not going to walk through each and all of this line by line as I've already kind of mentioned and given some examples where some things are being struck, are being moved over. This is in the VPIC chapter where you're amending the definition of plans to include the post employment retirement benefit funds for the state employees and the teachers. So that's under VFIC. So it would be considered under their plans moving forward. And so you do see, like, right here, a technical amendment to refer to the plans instead of the funds from the three retirement systems. Now it would be the plans, which would include the other post employment benefits funds. So you have some tax full amendments like that.

[David Chittenden (Deputy State Treasurer)]: And then

[Cameron Wood (Office of Legislative Counsel)]: as you can see here, BPIC duties, the Vermont Pension Investment Commission serves as custodian of the funds and responsible for their investments and referring back to the plans now because you've added more funds, trust funds into the definition. So again, all of this is clean up here, removing reference to the state treasurer as being custodian of the funds. As I mentioned earlier, here's where you're adding back in those standards of conduct, where it's deleting reference to the commission in the state system, adding it in here under BPIC directly, adding some information here in sub three about reports that need to be made based on the post employment benefit trust funds under VPIC's requirements under their annual reporting. So again, all of this is really more technical cleanup and moving the language that's being struck. Let's see, when I get to section 15, this is gonna be on page 25, we move over into title 16, so now we're talking about the teacher's retirement system. And again, you're gonna see the exact same thing striking the same language that we removed from the state system there on lines page 26, because it's been moved over to BPIC, as we just mentioned. So again, I'm not gonna walk through each of these. I know you have a long list of of witnesses to get to. So you see here on page 30 the same thing in the municipal retirements. We're removing reference there for the commission because you're consolidating all of this language under the Vermont Investment Commission chapter. And that gets us to page 32, pension credits. These next two sections are for the teachers' retirement funds, and then the next section would be for the municipal retirement funds. And what you're doing here is key language starting on lines 18 and moving forward. You're authorizing a member of these retirement systems who is elected to serve as the president of the employee organization designated as the exclusive bargaining representative for the employees. So the teachers, etcetera, same thing for the municipal. If there's a member who is then elected to be the president of that entity, you're allowing that individual to use the years that they're serving as president as creditable service for their requirements as long as starting here on line three and four, provided that on behalf of the member, the employee organization is depositing into the pension fund an amount imputed to be sufficient to provide the normal retirement. So as long as that entity is paying on their behalf for those years, they can be credited as service for the individual who is no longer a member and is serving as the president of that collective bargaining unit.

[Sen. Brian Collamore (Chair)]: Senator White.

[Sen. Rebecca “Becca” White (Member)]: I think this is a good thing based on if I'm understanding it correctly. If I'm understanding it correctly, if I worked in it's like saying this is not about whoever my employer is has to be already providing the benefit, and it's my employer and my specific department or my specific organization that would be the folks actually paying into the system. It's not

[Cameron Wood (Office of Legislative Counsel)]: Yeah. It's it's if you are a member, so you're a teacher, and then you're elected to become the president of the bargaining unit, you're not a member anymore as long as that bargaining unit is willing to pay for your the cost for you to use those years that you're serving as the president and covering the cost for you to use them as credit to your retirement, then you can use it

[David Chittenden (Deputy State Treasurer)]: as Yeah, a

[Sen. Tanya Vyhovsky (Vice Chair)]: makes sense.

[Cameron Wood (Office of Legislative Counsel)]: Okay. Yep. Those are the next two sections, which gets us to page 34, 35, and 36. And here is my Sorry.

[Sen. Alison Clarkson (Member)]: Yes? Just before we leave this section, how are the members of BPHC concentrated?

[Cameron Wood (Office of Legislative Counsel)]: This is not about BPIC.

[Sen. Alison Clarkson (Member)]: Oh, I thought these were members of the these are the No.

[Sen. Tanya Vyhovsky (Vice Chair)]: This is the labor of the union.

[Sen. Alison Clarkson (Member)]: Members that are on BPIC, and I thought they were allowing their years of service on BPIC to be credited. No.

[Sen. Tanya Vyhovsky (Vice Chair)]: No. This is the president of the union.

[Cameron Wood (Office of Legislative Counsel)]: The former employee of the retirement system or member of the retirement system that has been elected to be the President of of the the Right.

[Sen. Alison Clarkson (Member)]: Well, why is that to this?

[Sen. Tanya Vyhovsky (Vice Chair)]: Because you're letting them eat their pension.

[Cameron Wood (Office of Legislative Counsel)]: You're letting them use those years that they're serving for the collective bargaining units to count towards their retirement. Next section here, 23, capital debt. This is the capital debt advisory committee, and annually they submit a report to you all, and this is making some very, very technical amendments to the report that has to be provided about capital debt. Here, as you can see, they, as part of the report, that include criteria that recognize bond agencies use to judge the quality and issue of state bonds. There's a specific list of things that have to be included within that criteria. Currently, says other metrics at the committee's discretion. I believe that was even added just last year or week within the last year, and they're changing it to say other metrics adopted by recognized bond agencies. If anything, this narrows the scope of things that they need to include as opposed to being expansive. And my understanding is these tweaks were at the committee's recommendation in 2024. The legislative body didn't adopt them exactly as they were worded as the capital debt advisory committee. So the capital debt advisory committee wants to go with the language that they had proposed. I don't think there's really any significant substantive change to this. It is changing the words on the page. If anything, it's limiting their discretion a little further, and it's tying it to metrics that are adopted by recognized bond agencies, so there's rationale to the change. Similarly, on page 36, it's changing it from having to report on a capital assets depreciating ratio to instead reporting on measures reflecting the remaining useful life of state infrastructure. I think that's pretty much just a different way of saying the same thing. And then there was a section here related to positions that was deleted, and then you have effective dates. The task force takes effect on passage. The sunset of the diversion of money to the Ramat Saves Administrative Fund sunsets 01/01/2040, everything else 07/01/2027.

[Sen. Brian Collamore (Chair)]: Any questions for cameras? Okay. Thank you. You're welcome. Just for senator Clarkson's side, has nine members. Right. Eight of which vote. There are two gubernatorial appointees. There are members no. Sorry. I wish we had

[Sen. Tanya Vyhovsky (Vice Chair)]: Maybe tomorrow.

[Sen. Brian Collamore (Chair)]: Yeah. VEMERS, v c v stirs, and the third ones. Each of those have one member. VLCT has a member, and the School Boards Association has a member as I recall. The terms are four years. Right? And the scare of that VPIC doesn't have a vote, but he's elected by the other eight.

[Sen. Tanya Vyhovsky (Vice Chair)]: They don't have a fight in the I

[Sen. Brian Collamore (Chair)]: think that am I getting that close then?

[Cameron Wood (Office of Legislative Counsel)]: I believe so. I think the chair has tied breaking in the bed.

[Sen. Brian Collamore (Chair)]: Yes. It's obviously with age.

[Sen. Alison Clarkson (Member)]: And the chair is still Tom? Yes. Blanca? Yep. And the he came from which union? Or was he a governor appointee? I thought he was a governor appointee.

[Cameron Wood (Office of Legislative Counsel)]: I don't know. Think the the members of BPIC actually appoint the top as appoint the chair. But you have Barrett Henry on the back. He's probably the better person.

[Sen. Brian Collamore (Chair)]: Oh, Henry. Okay. Okay. Has anybody got a time constraint?

[Sen. Tanya Vyhovsky (Vice Chair)]: I was supposed to be

[Sen. Rebecca “Becca” White (Member)]: doing an interview at 03:30, but I can reschedule.

[Sen. Alison Clarkson (Member)]: I think one of the be directed to treasurer people at the time. Okay.

[Sen. Brian Collamore (Chair)]: I have a point in this. Okay. Tim, why don't you Chair.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: Thank you. Doug and director of Rob Retirement Systems in the state treasurer's office. Thank you very much for having me here today. One thing I did just wanna start before before I get into this as senator Clarkson, you asked for a guide about plans, a chart on one page Oh. In the day when I was here. So you can tell me if that

[Sen. Tanya Vyhovsky (Vice Chair)]: Faye, you look up you are divine.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: You can tell me if that looks useful, then we'll If

[Sen. Alison Clarkson (Member)]: it looks comfortable, which we like.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: If it looks good. That someone on our team, Bill Mechel made it, and you did a great job on it. So you if works for you, can post it.

[Rep. Matthew Birong (Reporter/Lead Sponsor, H.567)]: Sure. So I I think

[Sen. Alison Clarkson (Member)]: this this is at least at first blush, this is this is great.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: Well, good. I hope it gives the sort of picture overview.

[Sen. Alison Clarkson (Member)]: It helps them understand. It does. I think all of us would love coffee.

[David Chittenden (Deputy State Treasurer)]: Great. We'll get it up there.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: Thanks. So I was gonna focus on the retirement provisions, obviously. Yeah. But I think I'd like to start with the two big ones. There are a couple small terms. There's the interest on late payments and the service credit provisions. I think they're relatively contained. If there's any questions, I'm happy to get into them further. But the two things that I wanted to talk mostly about are the task force and the transfer of the OPEB assets to BPIF. So with respect to the task force, what we're doing with that, if you think back to 2008, that's when the legislature, through statute, put us on a closed thirty year period to pay down the unfunded liabilities of our management system. What that means is by 2038, every last dollar of that unfunded liability will be paid

[Sen. Alison Clarkson (Member)]: off. Okay. That's a Donna Swaney moment.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: It is.

[Sen. Alison Clarkson (Member)]: I know. I remember this.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: But that comes with risk as we get closer to 2038. As we approach that time period, if we have a really bad year It's time to make it up. It's Right. Exactly. If you have a bad year in '20 well, you have, you know, a a whole number of years to make up that that bad year. But if you have it in 2036, then that would get to a point where the legislature may not be able to make that payment because it would be so extreme. This is an issue that we've been thinking about for a while in the treasurer's office, and I know Eric and team at BPIC have also been thinking about it because it impacts the type of investments that they can make when they have potential liquidity issues. So what we're planning on doing and the boards to your point, senator Clarkson, the boards have already started some work on this. Last year, we did some risk assessments where we had our actuaries model some different ways that we could fund our unfunded liability, and there are a few different options. We're on a closed closed method right now. Like I said, that gets us fully funded by a certain date. There are open methods where you just basically it's like refinancing every year and continually moving out your the date you're gonna pay. That has some drawbacks.

[Sen. Alison Clarkson (Member)]: The child is having a thing. Think a lot of keep the response.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: Well, a lot of folks have that response too, but there's a way that a lot of systems are moving these days. It's called layered amortization, where you pay off, you commit to paying off the current today's unfunded liability by 2038, so no change there. But for every year from from now on, you're gonna have a gain or a loss.

[Sen. Brian Collamore (Chair)]: You're never gonna hit it right on

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: the head. So what you do is for each of those future years, you amortize each of those years on a set time frame. And the hope is, so you know, say we have a small gain this year, we amortize that over ten years. The next year we have a small loss, we amortize that over ten years. And so you'll have all these layers that It's pushing

[Sen. Alison Clarkson (Member)]: it.

[David Chittenden (Deputy State Treasurer)]: Yeah.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: Well, those that offsets so, you know, you have gains offset losses, and it mitigates that volatility in the last year. So it's a it's a direction that the industry is moving, and it's something that I think bears serious consideration. Mitigation and volatility. Yes. But this is something that it's a really you know, our policy has been in statute for a long time. It's got broad consensus. It makes a lot of sense. It's worked well for the state. And so the thinking, this summer, treasurer suggested that we bring sort of a a slimmed down version of the task force that preceded act one fourteen, similar stakeholders, but more maintained and with a very discreet focus that we look specifically at this issue and think what is in the best long term interest of the states that that, quote, pays off our unfunded liabilities, but does so in a way that mitigates risks to the state, annual budgets. Senator Morley,

[Sen. Brian Collamore (Chair)]: so 2038 is the the date. So some of those years, you're gonna be better. Yes. Some years, you're gonna be worse. So I'm guessing over time, they're just gonna average yourself out even if you had a bad year later on.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: Yes. The problem with the close end where we are right now Yeah. Is if in 2036, for example, we have that really bad year, we've only got two years left, and we gotta make up that whole difference. So we did some modeling in our risk assessments, and it could take you know, the the charts are scary with what and what we would come to the legislature with if we were under that policy would be something that could double the ADEC in a year because you only have a very short period of time for a statute. I guess I'm

[Sen. Brian Collamore (Chair)]: I I didn't realize that you're closed and open.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: Right. And what is that? Open is sort of you never pay it off. You just sort of each year, you say, what's our you look at our gains and loss in the total balance, and you re amortize out that over another a new ten year period or twenty year period, whatever you're gonna use. And then you just keep doing that. The layer is kind of more like an closed period, but it provides for new gains and losses. It provides that safety valve of not having big spikes. Or So it's just softening things? It's all I think it's all of the charts. It's when you look at the charts the actuaries did for us, you know, when they modeled bad scenarios, it would be a big spike. And as soon as they remodeled it under a layered approach, it smooths that off. That's the point to try and mitigate volatility. That's this. That's My takeaway. Yes.

[Sen. Alison Clarkson (Member)]: I can get it. I don't understand. Yeah.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: I put a deck together. It's in the materials, and you can look at some of

[David Chittenden (Deputy State Treasurer)]: those charts.

[Sen. Alison Clarkson (Member)]: Job is done in '38, gotten us successfully to '38, liabilities? Funded. Funded. We yeah. We're all funded. We're happy, ready to go forward. Do we they are they sunset for '38? And then we'll rethink the group that's gonna figure out how we go forward.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: So this task force is is just just lives for this year.

[Sen. Alison Clarkson (Member)]: Oh, it's only for one year?

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: Correct. What we're trying to do is put it our current policy is reflected in law. What this task force is ultimately gonna deliver is a proposed revision in the law that puts us on a path. The boards,

[Sen. Alison Clarkson (Member)]: the entities designed to keep us on the path until '38.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: No. That's what you folks will do with the with the revisions of the law, hopefully, if if everyone agrees with Yeah.

[Sen. Alison Clarkson (Member)]: It's always useful to have group

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: That's what our retirement boards do. We we monitor that every year very closely, reaching risk assessments about it Keith. To make sure that we're on task. And and believe me, between the treasurer's office VPIC and the retirement boards, if we were getting a little drag, there would

[Sen. Brian Collamore (Chair)]: be flags being thrown out. Anything

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: else for Chip? Yeah. Sorry to be asking.

[Sen. Tanya Vyhovsky (Vice Chair)]: Yeah. I I appreciate that people are getting off track on the sort of investment aspects. There's flags being thrown or will be thrown, and and I appreciate there are major changes in what's actually happening in the sort of move to the VPIC. But I'm still trying to understand how VPIC's investment choices are held accountable. And not just to whether their the return on investment is acceptable, but if they're following the laws on what types of things we invest in. And the specific reason I ask Yeah. Is because of the February $826,000 investments in Israeli government bonds. We have a policy that explicitly says we do not invest in governments doing genocide. And so I'm trying to understand how they are held accountable to how they are investing.

[Sen. Alison Clarkson (Member)]: And and we sorry. We went through this also with of oil. I mean, we've gone through this on We several have. And if we

[Sen. Tanya Vyhovsky (Vice Chair)]: have said you can't do that, then how has it happened? You know, were they accounted to? Yeah.

[Tim Duggan (Director of Retirement Systems, Vermont State Treasurer’s Office)]: I would probably defer to my colleague, Eric Henry, who will be able to speak much more eloquently to that topic.

[Sen. Alison Clarkson (Member)]: Okay.

[Eric Henry (Chief Investment Officer, Vermont Pension Investment Commission)]: I am happy to speak for VPIC now or wait until you all are ready for me on your schedule, whatever works best for you all.

[Sen. Alison Clarkson (Member)]: No, as long as Tim's all set and we're all set with him. It needs to be cut.

[Sen. Brian Collamore (Chair)]: We could move to you, I think next year.

[Eric Henry (Chief Investment Officer, Vermont Pension Investment Commission)]: Well, thank you all very much. For the record, I'm Eric Henry. I'm Chief Investment Officer for the Vermont Pension Investment Commission. We receive about $8,000,000,000 in investments for the three statewide pension plans and the supplemental teachers COLA plan. We support the enactment of H567. We do recognize it will bring an additional level of workload with it and additional level of complexity, but also will provide an additional level of rigor and strategic analysis and specific strategic alignment of the investment strategies for these OPEB assets with the liabilities of the pension plans. Performance at BPIC has been very strong in recent years. This past fiscal year, 10.7% net return, second year in a row that our private equity program ranks number one in the nation among public pension funds for the ten year period. This follows a strong 2024 with a 10.2% net return, both years well in excess of the 7% discount rate, both of those actuarial investment gains reducing the ADAC and reducing the unfunded accrued liability. We continue our efforts to maximize long term returns within prudent levels of risk and liquidity. We're also working to assure that our investment strategies are sustainable, but it all runs through primarily a three pronged approach. Number one, an active proxy voting program. We vote the proxies and the companies in which we invest to make sure those management teams are addressing risks like the one you just identified, Senator Vyhovsky. Engagement efforts with the boards and management teams of the companies in which we invest. If we feel like they're not adequately identifying and addressing these risks, we engage with those boards to make sure they are doing so. We use our proxy vote as the stick, and we are often able to get to a carrot outcome by negotiating a successful resolution before it even gets to a proxy vote. And then finally, building a long term plan to support decarbonization both of our portfolio and the global economy. You may recall the consulting report we engaged Makita for a

[Sen. Brian Collamore (Chair)]: few years back. We're working

[Eric Henry (Chief Investment Officer, Vermont Pension Investment Commission)]: to implement that report now, specifically Options three and four, to make sure that, again, we are investing in the clean energy transition. We're investing to make BPIC's portfolio carbon free. We're also investing to make the global economy carbon free. We believe all of these efforts are in the best interest of the members and beneficiaries of the three statewide pension plans. Everything we do at BPIC is aimed at maximizing returns with improving levels of risk and liquidity. Many of these risks, though, stem from non financial factors, things like climate change, group think, fair labor standards. We're able to engage with the companies in which we invest to make sure they're addressing those risks to with a goal in maximizing the valuations of those companies, cash flows, profitability, and ultimately the returns on those companies. With regard to your specific question on those bonds, so we do not have any current policy prohibiting that. We do have a committee that handles what we're calling it the stewardship committee that oversees all of our engagement efforts, advises on works with our consultant, Siegel Marco, to identify risks that we should be considering, those that come from non financial sources like this, and really helping the board and the commission staff understand the impact of these risks on potential investment returns current and future. We have requested an additional position to aid us in the additional level of scrutiny analysis and rigor that these new assets would require. The House has supported that and has added it to their budget. We testified before Senate appropriations earlier this week, they appear to be supportive of it. We believe enactment of five sixty seven and moving oversight of these OPEB assets to BPIC is good for members and beneficiaries of the plan, but also good for the state and for the taxpayers. Happy to take any other questions about OPEB's or anything else happening at BPIC.

[Sen. Brian Collamore (Chair)]: I just want to reiterate, I think Representative Bayron made it clear that there's no fiscal impact for the general fund with the addition of that position and its revenue neutral in essence.

[Eric Henry (Chief Investment Officer, Vermont Pension Investment Commission)]: That's correct.

[Sen. Brian Collamore (Chair)]: Any questions for yes, Senator White.

[Sen. Rebecca “Becca” White (Member)]: Well, I guess I'm just confused by the response related to Senator Vyhovsky's question because I thought we did have a policy. I'm maybe a misunderstanding. So we have no policy as a state on Well, because did we do the apartheid resolution for South Africa? That was a part of work that was done. I had

[Sen. Brian Collamore (Chair)]: a Well, a resolution isn't

[Sen. Rebecca “Becca” White (Member)]: Well, didn't we I thought we divested from No. We never did. No.

[Sen. Alison Clarkson (Member)]: We can't even get no. Not what makes up.

[Sen. Tanya Vyhovsky (Vice Chair)]: What I I realized I'm actually looking at is the VPIC policy,

[Sen. Alison Clarkson (Member)]: not

[Sen. Tanya Vyhovsky (Vice Chair)]: a state policy. As I'm reading, and maybe it's been updated, the VPIC policy is that a letter will be sent annually to all investment managers stating VPIC's policy on investments in terrorist or genocide linked countries. And investment managers will be asked to report on their perspectives about the risk that terrorism and genocide place on the portfolio and what efforts the manager is undertaking to screen for possible terrorist or genocide connections within with securities held on behalf of the bank.

[Sen. Rebecca “Becca” White (Member)]: Okay. Yeah. So that's So it's their policy? It's their policy.

[Sen. Tanya Vyhovsky (Vice Chair)]: But as I read it more closely, it, I guess It's not stopped. The way that I read it was that that was in an effort not to invest in genocide and terrorism, but I guess that's not It's just to report. Just yeah.

[Cameron Wood (Office of Legislative Counsel)]: Yeah, we're not

[Sen. Alison Clarkson (Member)]: just reporting it to an advisory. Go ahead, Erin.

[Eric Henry (Chief Investment Officer, Vermont Pension Investment Commission)]: And that policy actually stems from, I believe it's the Office of Foreign Assets Control in the federal government that maintains that list of terrorist and genocide linked companies. We do review that risk list regularly and ask our managers to respond to it. I can't tell you for sure who's on that list at the moment, but we do comply with that part of our policy where we are asking our managers to attest that they're in compliance.

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: Any other questions for Eric?

[Sen. Brian Collamore (Chair)]: Okay, thank you very much. Say hi to Tom for us. Thank you all. We appreciate it. Thank you very much.

[Sen. Alison Clarkson (Member)]: I do. I wish when VPIC testified that we get cupcakes from Laura the way that we get cookies from Terry Horsey. I think I recall her that. Oh, yeah.

[Sen. Brian Collamore (Chair)]: David Cheer, you were next on the agenda.

[David Chittenden (Deputy State Treasurer)]: Yes, senator. If you don't mind it, Not

[Sen. Brian Collamore (Chair)]: at all. Property director and

[David Chittenden (Deputy State Treasurer)]: then I'll close out on the final pieces. Yeah. Alright. Thank you.

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: Hi. Albert Garro, director of One Penn Property at the treasurer's office. Thanks for inviting me over. As you all know, Point Property is a consumer protection program. We safeguard assets until we retain and return them to the bank or homeowners or repair heirs. Our small changes help us do that. For example, section one, when we talk about medical policy payments to the unclaimed properties, sometimes we get bulk payments from insurance providers. Medical providers claim those, but they don't know how to post them to their patient's accounts. We're asking for a number, an explanation of benefits number that will protect the patient's HIPAA. We won't get any HIPAA information. We'll only get a number that that medical provider can then post the right account so they can post it to their patient's accounts. I'm gonna skip section two and three and go to section four. This small change raises the amount of property that the treasurer can return without a same form from $250 to $1,000 Treasurer has a money back program where he uses matching, we match data with the other state agencies to locate individuals within the state. Then we just send them a letter and a check. No need for them to file a claim. Section five raises the estate amount. If we have money for a deceased individual, we're going to raise the estate amount from 5,000 to 10,000 to make it easier to get the money back from the families. It also changes the limit where we can return it to one heir from $2.50 to $1,000 Currently, we have money for $300 for a deceased individual and the children are claiming that, if they're 10 children, we have to split that anyways. This will raise that to $1,000 So you can send out one check versus. Questions for all the property?

[Sen. Brian Collamore (Chair)]: No. I have other questions, but they're sections two and three. So Okay. So if I Well, yeah. Senator Clarkson.

[Sen. Alison Clarkson (Member)]: So we bumped into the the sub category of unclean property, which is unknown property. And would you be kind enough to, and a lot of this, you seem to have errors that are specific, so those are the other sections. But unknown property remains unknown for how long. What's our what's our policy on unknown property? And and that also goes gets swept into the general fund. We were looking at it for funding a housing piece earlier this week, so that's how I got introduced.

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: So we do get unknown money and where the holder or the business doesn't know who it belongs to. They know it's unclaimed. They know it's not theirs, so they turn it over as unclaimed property. That money sits with us forever. However, it is subject to the sweet to the general fund.

[Sen. Alison Clarkson (Member)]: Yeah, was going to say, it doesn't just sit there.

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: It gets swept into the general fund. So the state does use that money for the benefit of all Vermonters while the chances is that nobody's gonna claim it. We do have some unknown property that does get claimed, like, for example, if whomever bearer bonds. So whoever has that bond does that Physically owns it. Has it. Right. That's that those properties get turned over as unknown. If they don't go to the loan. Then somebody finds a bond in their dresser drawer and they contact the bond paying agency and say, No, that's the machine. They come to us and get that money. We do pay it on unknown property. However, the majority of it will not be paid out, and it is used for the benefit of the Okay.

[Sen. Brian Collamore (Chair)]: Thank you. Thanks.

[Sen. Alison Clarkson (Member)]: Welcome,

[David Chittenden (Deputy State Treasurer)]: David. Thank you, mister chair, for the record, David chair, deputy treasurer. I will go over sections two and three, which I'm guessing there's a few questions about. Explain a bit more about that. And I also Al and Becky, who's the director of our economic empowerment division, Becky Wasserman Mhmm. And also runs the BTCH program. We'll both be here as points of reference as well.

[Sen. Alison Clarkson (Member)]: I love that type of fact. Empowerment. What's it called again? Economic empowerment. That's your great title.

[David Chittenden (Deputy State Treasurer)]: Good.

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: Sorry. Just following up the Good.

[David Chittenden (Deputy State Treasurer)]: K. So these are sections two and three, which have to do with funding the Vermont SAVE program's self sufficiency. And so the Vermont SAVE program, as you may recall, is a program for individuals in Vermont who do not otherwise have access to retirement program, our retirement system opportunity. To get that, it is run through the treasurer's office. And that, as I'll describe a little bit more, the program does throw us some revenue, but it until it it will take a few years before that revenue does enough, and they can sell sufficient. And so this is a way to bring it to self sufficiency. So what does the proposal do? Proposal will run the BTCS program until it reaches self sufficiency. It will do that without impacting the general fund, and it the proposal will provide a greater revenue to the higher education and trust fund than is currently happening under current law.

[Cameron Wood (Office of Legislative Counsel)]: May I ask question, mister chair? Yeah.

[Sen. Alison Clarkson (Member)]: So what is our prediction as to when the fund will reach self sufficiency? Fiscal year 2033.

[David Chittenden (Deputy State Treasurer)]: And in your materials, under my name today is a much more in-depth model showing the revenues over the coming years and a pretty in-depth assessment of how that revenue revenue and expense line will be calculated to 100%. I'll go through a little more on a higher level as to what that will look like with respect to this particular transfer, but the detailed numbers are in there.

[Sen. Alison Clarkson (Member)]: And just given that you're here and we're kinda getting update on the SAES program that we're all very proud of and happy that it's launched, how many veranders are using it?

[David Chittenden (Deputy State Treasurer)]: So we have it launched, I believe, in March. It goes to fifteen months now.

[Sen. Tanya Vyhovsky (Vice Chair)]: December. December. Okay. So twenty fourth? The the open enrollment went into March. Got it. Okay.

[Sen. Alison Clarkson (Member)]: So Chittenden is joined at any point game.

[Sen. Tanya Vyhovsky (Vice Chair)]: Is it always on the home? Launched the initial, like, open Just say who you are. Oh, sorry. Becky Wasserman, office of the treasurer. The program opened in December and that's when the initial notification went out to employers to register for the program and the enrollment period was a free month period. You can register at any time, and we just have these handy ball leaves where we contact employers who might not have been mandated to register last year, but are now required under the law based on their important structural or important. Used to have a program, a retirement program through the workplace no longer used, so now they're required to register.

[Sen. Alison Clarkson (Member)]: And it said it was December '24, I thought. Yes. Yes. Because it went and kicked in in March '25. Great.

[Sen. Brian Collamore (Chair)]: I have a concern, and I know these are probably going to be difficult questions and politically charged to some degree. This Vermont Saves program was instituted as a voluntary program, if I remember.

[David Chittenden (Deputy State Treasurer)]: That's right. An issue.

[Sen. Alison Clarkson (Member)]: Yeah. It's

[Sen. Tanya Vyhovsky (Vice Chair)]: oh, it is it is a man it's mandated for employers who have certain

[Sen. Brian Collamore (Chair)]: called employees. Right. And the move at at the beginning, I'm trying to recall, five employees, something like that. Okay? Or And then I think the treasurer's office asked that that be elevated to another number higher than five. And it I don't know whether that's still true or not. This appears to be just, again, that it's not working as well as first anticipated and that it needs more money in order to run the administration of the program. So I'm not sure whether that's a true statement or not. Don't know how many employees are there. I also remember that when it first opened up and you could reg you could quit at any time. I think that's still true, but whatever you put in there is still yours at some point to to gain back. So am I mischaracterizing the reason that we're taking away from the state higher education fund, in essence, and giving it to the Vermont Saves Program, the bill says until, I think, 2040, so if you multiply thirteen years times $300,000 is $3,900,000 that's gonna be put into the Vermont SAFE program, then it reverts 100% back to the higher education fund. All that correct?

[David Chittenden (Deputy State Treasurer)]: That's not quite right, Senator. Okay. If you'll give me a few minutes I'd

[Cameron Wood (Office of Legislative Counsel)]: love to be educated. Yep. Yeah. So

[David Chittenden (Deputy State Treasurer)]: over the lifetime and I'll get into I'll walk through the mechanism a little bit more, but just briefly, over the lifetime of this provision, more money will end up in the higher ed trust fund than it would without this provision. But not immediate. Not there will be a two year period where it'll dip, and then it'll start going back and above. So the higher ed trust fund will end up better off than it is under the current system. And the total amount that would ultimately sort of shift through this transfer to support the VICI Saves program would be something on the order of a little over 700,000 as the revit, and that number will shrink each year. The total number will shrink each year. But I can go through and talk a little bit more about how that would all work if that'll be helpful. And I and I do wanna emphasize, you are correct, that it's although it's mandatory for employers with two employees or more to register, it is optional for any employee as to whether or not they want to be a part of it. They can opt out. They can take their money with them if they do opt out. Okay.

[Sen. Brian Collamore (Chair)]: And what about, and I realize expectations are predictions to some degree. Is it working the way that the state treasurer's office hoped it would when it was instituted, or is this sort of giving it a little bit of a a nudge forward?

[David Chittenden (Deputy State Treasurer)]: I would say it is working the way the state treasurer's office hoped it would in the, whatever it is, sixteen months that it's been in existence. It's gone from zero accounts to nearly 6,000, about 5,800. Mhmm. It's gone from $0 under management to more than $6,000,000 under management. So you've seen a pretty significant uptake on the order of what I believe was anticipated. I think that there is a need to have a a bit of additional funding to make sure that we can keep running the program as it should run until we get to self sufficiency. But I would say in terms of uptake, it's on the order of expectations. Okay.

[Sen. Brian Collamore (Chair)]: And I imagine, well, there's some pushback from the state college system. Maybe not. I don't know.

[David Chittenden (Deputy State Treasurer)]: I can tell you that the three beneficiaries of the the higher trust fund do not object to this proposal. Okay. Talk to them talk to them in the fall.

[Sen. Alison Clarkson (Member)]: They have no objection. That's helpful to know. Center flexes. Yeah. Could you say that we we went from zero before we started to now we're 6,500 people.

[David Chittenden (Deputy State Treasurer)]: 5,800 something. Mhmm.

[Sen. Tanya Vyhovsky (Vice Chair)]: It's yeah. It's just just over 5,800. It obviously changes Yeah. Every

[Sen. Alison Clarkson (Member)]: That's great. And it went from

[Sen. Brian Collamore (Chair)]: $0 to 6 and a half million.

[Sen. Alison Clarkson (Member)]: Yeah. And that's, so 6,000,000, 6 and a half million

[Sen. Brian Collamore (Chair)]: or 6? Well, somewhere north of 6, yes.

[Sen. Alison Clarkson (Member)]: 6 plus. That's exciting. Okay. And what are we doing with the earnings of that? Is that just going into the savings program? The 6,000,000 that's invested, where's that money going? Or is that an opportunity to fund something?

[Sen. Rebecca “Becca” White (Member)]: No, no, no.

[Sen. Tanya Vyhovsky (Vice Chair)]: It's the retirement. It's the savings.

[Sen. Alison Clarkson (Member)]: So those plows into the retirement.

[Sen. Tanya Vyhovsky (Vice Chair)]: It's just the amount under management of all the accounts combined. So it's just the individual's It's

[David Chittenden (Deputy State Treasurer)]: their retirement savings.

[Sen. Alison Clarkson (Member)]: Yeah, no, it's exciting because this is time for people who didn't have retirement accounts. Correct. All the legislators should have been enrolled for free. Just say. That's not in the bill. It could be. As I look at retirement in the face and after twenty two years having not one penny of retirement money for twenty two years of service, I might be the man who's coming.

[Sen. Rebecca “Becca” White (Member)]: Oh, we could join SABE, technically, right? Or is

[Sen. Alison Clarkson (Member)]: it because

[Sen. Tanya Vyhovsky (Vice Chair)]: we're not employees, we're

[Sen. Rebecca “Becca” White (Member)]: not like, you could individually join

[Sen. Brian Collamore (Chair)]: if you agree.

[Sen. Alison Clarkson (Member)]: Yeah. Hope I have

[David Chittenden (Deputy State Treasurer)]: It's an option. No.

[Sen. Rebecca “Becca” White (Member)]: But you've but I'm I am we had to talk about this because we're not considered employees, but since we do get a regular paycheck, we're considered eligible. So you actually could, if you're

[Sen. Tanya Vyhovsky (Vice Chair)]: not involved. Actually, believe some people have. Right. So any person can self enroll if their works for you then. Right.

[Sen. Alison Clarkson (Member)]: That's why one of the reasons I'm

[Sen. Rebecca “Becca” White (Member)]: Yeah, so if you really are struggling, you can certainly

[Sen. Alison Clarkson (Member)]: Yeah, absolutely. I'm happy to help with that. Thank

[Sen. Brian Collamore (Chair)]: you for those answers. Hope I wasn't

[David Chittenden (Deputy State Treasurer)]: No, no, I'm happy to answer the questions and provide more. Provide an

[Sen. Alison Clarkson (Member)]: Opportunity to get an update on this.

[David Chittenden (Deputy State Treasurer)]: So to explain a little bit about the current status of the transfer as it currently exists, unclaimed property so there is transfer, as you mentioned, that goes from the unclaimed property fund to the Higher Education Endowment Trust Fund. Unclaimed property accounts that are more than ten years old and less than $100 are subject to that transfer. So every year is that pool ages from year nine to year 10. Some of that amount is swept in. Everything under $100 is swept in. And just a side note here, of course, the money always does ultimately belong to the rightful owner, but there are amounts that go on.

[Sen. Alison Clarkson (Member)]: So, Paul, Paul, rather than that, we again, an update. Unknown from the unknown property crowd, how many actually end up being finding the right where they, you know, where it belongs? So for unknown money that

[Sen. Tanya Vyhovsky (Vice Chair)]: would I

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: would say less than 10%.

[Sen. Alison Clarkson (Member)]: Okay. And of unclaimed, how much ends up in the pockets of the people who should have it?

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: The unclaimed, all the full unclaimed? We average our That's that. It's up against us. 55% on the long term average, that's what we return to

[Sen. Alison Clarkson (Member)]: ours. That's pretty great. And you know, we do our bit in terms of advertising. It's one

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: of the top returns in the country.

[Sen. Alison Clarkson (Member)]: Oh, that's great. You should be proud of

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: it. I am. Thank you.

[David Chittenden (Deputy State Treasurer)]: You did a lot of work for that.

[Sen. Alison Clarkson (Member)]: Yeah. Know you do. I remember when it first came out on newsprint. Correct, me too. Well, was fun going through it. The day it came out, they were all pouring through it. So

[David Chittenden (Deputy State Treasurer)]: the next slide shows a little bit about, more about the annual contributions. You can see on the right hand side there, it shows the last five years in terms of the amounts that were subject to this sweep. So not a huge amount as compared to the body of the fund. On the left hand side, you can see the scale of annual contributions to the higher ed trust fund. So the the unclaimed property transfers are there. They you can just barely see them. Yep. The the real increase to the body of the higher ed trust fund has been through the estate tax. Oh. So those large green bars that go up, those are large estates that have come through intermittently through the years. Obviously, in '25, there's an especially large one, about 26,000,000. That's where the real money comes from in terms of increasing the body of the fund, which is about $6.07 and a half million now.

[Sen. Alison Clarkson (Member)]: That's just the tax. That's just the estate tax.

[David Chittenden (Deputy State Treasurer)]: The big green bar, yes. Almost all of that money comes from the estate tax. There is that's a but there is this transfer that's happening every year. When did it start out? Believe 2006. Treasurer Spalding was Treasurer Yes. Right. Yeah. So since you from 2006 to now, there are these small transfers that have happened. The vast majority of the principal and the higher interest on the tax. The proposed changes are the property that is now ten years more than ten years old and less than 150, up from a 100, will be transferred. There will be a cap a cap on that annual transfer at 300,000 to sort of smooth volatility if you were to do as the legislative council mentioned. If you'll be do a a on certainly a very large transfer in the first year and then sort of more uncertainty going on. If you don't do that, it sort of keeps it smoothly at 300,000 throughout each year. And there will be the addition what we're proposing is the addition of the Roth Retirement Security Fund to the transfer, and it'll effectively operate as a waterfall. Senator Vyhovsky?

[Sen. Tanya Vyhovsky (Vice Chair)]: So does whatever's above 300,000 then just stay where it is now and not get transferred anywhere?

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: Effectively, yeah. So that money is subject to the general fund transfer just like any other funds. So because the money's ten years old, it's already been subject to general fund transfer. And it is any carryover money is subject every year to the general fund transfer. So it is part of that calculation. Okay. You know, this is just an additional transfer.

[Sen. Tanya Vyhovsky (Vice Chair)]: Okay. So it's not just gonna be hanging out. So if we rate that cap to and capture all of those that are currently over ten years old that are $50 more, it's gonna be kind of a balloon. 1,600,000.0.

[Cameron Wood (Office of Legislative Counsel)]: As well over 1,000,000.

[Sen. Tanya Vyhovsky (Vice Chair)]: Right. So currently, if we did this, what would happen is 300,000 of that would go to the retirement security fund and the other 700,000 or whatever would go to the general fund?

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: Would stay, it would be subject to the general fund transfer just like we We did this we take in money, we retain 55% paid financing expenses, 45% goes to the general fund every year. And we include money carryover from the previous year. So it is subject to the general fund transfer year after year after year. Okay.

[David Chittenden (Deputy State Treasurer)]: And then is it correct to say, Al, this is part of the calculation,

[Cameron Wood (Office of Legislative Counsel)]: the higher ed plus fund transfer, part

[Sen. Alison Clarkson (Member)]: of the general fund transfer calculation.

[Sen. Tanya Vyhovsky (Vice Chair)]: Okay. So those $1,100,000 in claims that we're creating from 100 to 150 aren't just gonna chill, they're gonna just move as they would currently?

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: Correct. Absolutely. They're still subject to the general fund transfer policy. Okay.

[Sen. Alison Clarkson (Member)]: So then I

[Sen. Tanya Vyhovsky (Vice Chair)]: guess my my follow-up question, why wouldn't we just let that 1.1 go in now, get you to sustainability now and then carry forward?

[David Chittenden (Deputy State Treasurer)]: I mean, it's more than we would need. We're trying to Okay.

[Sen. Tanya Vyhovsky (Vice Chair)]: Not that much, but

[David Chittenden (Deputy State Treasurer)]: take more than we would need, I think, is is one thing. I think the idea also was to if we do the system to make sure that we wanna leave everybody better off than they were in the past. So the idea was to make sure that we have this sort of extended period of time where the higher interest fund will very quickly be better off than it was before and will continue to be for a while. I mean, you know, could do a larger transfer all at once, but that would change the impact on the general fund transfer. So we're really trying to do the best we can to hold everything harmless as much as possible and keep this to be a very smooth and nonvolatile type of proposal.

[Sen. Brian Collamore (Chair)]: And the intervening two years, is anything going to the Higher Education Trust money?

[David Chittenden (Deputy State Treasurer)]: It will, yeah. So I can skip ahead. Okay. Listen. Yeah. So I can skip it. Well, let let me

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: do this, and I'll get

[David Chittenden (Deputy State Treasurer)]: to that. Okay. If that's okay with you, Shannon. Sure. The but the short answer is yes. It will even in the short term. This shows the funding sources for Vermont's SAES program. So you can see in FY '27, the green well, each year, the green is the program revenue, and the red is the unclaimed property transfer funding. Mhmm. So you can see in the first year, it's 57,000 is coming from revenue and f y '27 and then 242 coming from unclaimed property. And as the revenue increases each year, the unclaimed property, the amount coming from unclaimed property transfer decreases until you get to f y 33. And now the according to projections we've we've built out, it will be fully paying for itself. The revenue coming in will fully pay for the program. And then you can see what the impacts are on the actual allocation. This is the $300,000 cap that are you can see the lines of 300,000 each year because it's subject to $300,000 cap. So for the at the beginning, obviously, the majority is going to the Vermont Security Retirement Fund, which is BT saves. But over time, more and more of that goes to the higher interest bond. And in fact, fairly quickly, you end up in a situation where by FY '29, you're seeing more going into the higher education trust fund than you would have had this statute or this proposal not k. Been put in place. You can see on the right hand side, gives you a sample of what it would have been had the cap been higher. So it is a substantial increase as you can see. And the impact on the higher end trust fund in this chart, f y '26 is only blank because it's is f y '26. We're not that bad. It's not

[Sen. Brian Collamore (Chair)]: that there's nothing going in.

[David Chittenden (Deputy State Treasurer)]: So for FY twenty seven to twenty eight, there is a dip. But already by '29, you're above the highest transfer that there ever has been to the higher end trust fund. It goes up from there and stays up at 300,000. And so over the lifetime of this transfer, the higher interest fund will see more revenue. There'll be some revenue that will temporarily come into support VT saves, and that will become self sustaining. Higher interest fund is better off, and the general fund is not impacted. But

[Sen. Brian Collamore (Chair)]: the trust fund is for scholarships. Right?

[David Chittenden (Deputy State Treasurer)]: That's correct. Yeah. So the Higher Ed Trust Fund supports scholarships for low income students from the institutions.

[Sen. Alison Clarkson (Member)]: VESAC, UVM and colleges.

[David Chittenden (Deputy State Treasurer)]: And there's a report I get in the committee on the higher ed post bond that

[Sen. Brian Collamore (Chair)]: has quarantine cover at all. We'll get through.

[Sen. Alison Clarkson (Member)]: We have a a Chittenden, I think, spot or oh, not so New England for the. Yeah. I don't have it's I have

[David Chittenden (Deputy State Treasurer)]: the list of committee members. I can get you that.

[Sen. Alison Clarkson (Member)]: Yeah. Do we have a legislator's on?

[David Chittenden (Deputy State Treasurer)]: I don't remember off the top of my head. I apologize. Yeah.

[Albert Garro (Director of Unclaimed Property, Vermont State Treasurer’s Office)]: Any other questions for David?

[Sen. Brian Collamore (Chair)]: Okay. I think you wanna testify, Rebecca?

[Sen. Tanya Vyhovsky (Vice Chair)]: Don't. Unless you have questions on Vermont saves, I don't have anything to add.

[Sen. Alison Clarkson (Member)]: Well, we managed to make it work despite our initial need for legislative investment. So this is right. Really well done. Thank you.

[Sen. Brian Collamore (Chair)]: Yeah. We'll certainly pick it up again and see where we go.

[David Chittenden (Deputy State Treasurer)]: Happy to happy to be here.

[Sen. Alison Clarkson (Member)]: Alright. Well, thank you for this is great.

[Sen. Brian Collamore (Chair)]: Thank you. Okay, committee. Ten minute break, and we will be back with page nine seventeen. This is the Agri relating to military affairs. You remember Representative Stone presented this. The bump if you use a pun, that's the bumpers won't seem to be the part we need. Or the veterans who have a disabled None

[Sen. Rebecca “Becca” White (Member)]: of them. More like a consideration. And we found out

[Sen. Brian Collamore (Chair)]: that We tried to figure out if they come and the gate goes up, they What happens? And then they come out, the gate won't go up until they What are we gonna do?

[Sen. Alison Clarkson (Member)]: Yes.

[Sen. Brian Collamore (Chair)]: But we've been unable to find anybody who runs those companies. Well, have them. They don't

[Sen. Alison Clarkson (Member)]: have a lobbyist biller and

[Sen. Tanya Vyhovsky (Vice Chair)]: sorts of things. And they didn't respond to the

[Sen. Alison Clarkson (Member)]: And they didn't respond. Linda was in touch. So the lobbyist very kindly reached because I reached out to them and said, who are you with this car? And they they didn't know anybody. And and then so I gave the contacts to Lynn and I tried to find them and then

[David Chittenden (Deputy State Treasurer)]: saying, hey.

[Sen. Alison Clarkson (Member)]: No. No one's responded.

[Sen. Tanya Vyhovsky (Vice Chair)]: I bet if I introduced an amendment to prohibit them charging fees, they thought made themselves appear

[Sen. Rebecca “Becca” White (Member)]: It would be known. No.

[Sen. Tanya Vyhovsky (Vice Chair)]: That's very quick.

[Sen. Alison Clarkson (Member)]: They could certainly

[Sen. Brian Collamore (Chair)]: That would not be being nuts.

[Sen. Tanya Vyhovsky (Vice Chair)]: Well, I don't I do actually believe that in instances where a municipality or what private lot They contract with a private

[Sen. Brian Collamore (Chair)]: company.

[Sen. Tanya Vyhovsky (Vice Chair)]: When but when those entities choose to make it the only way you can pay is through one of those apps, I don't think they should be able to charge those fees because you have no way

[Sen. Alison Clarkson (Member)]: to pay it without going. Right. Because otherwise you can't put the quarters in to pay it.

[Sen. Brian Collamore (Chair)]: Yes, they don't take cash, don't think.

[Sen. Alison Clarkson (Member)]: They do, well any Not the case, doesn't.

[Sen. Brian Collamore (Chair)]: There's no one there.

[Sen. Tanya Vyhovsky (Vice Chair)]: Right, but in those instances, if you're not providing a way for someone to pay it, that doesn't incur the fee. I think the fee should be on the provider, not the person.

[Sen. Brian Collamore (Chair)]: So my question is, do we just take the bill and let someone else deal with it? Let someone else deal with it.

[Sen. Alison Clarkson (Member)]: I mean, I I don't Oh, I

[Sen. Rebecca “Becca” White (Member)]: well, I'll say I'm very supportive of the bill.

[Sen. Alison Clarkson (Member)]: No. I'm like Yeah. I I

[Sen. Rebecca “Becca” White (Member)]: I don't wanna get That was

[Sen. Brian Collamore (Chair)]: the only point that I remember

[Sen. Alison Clarkson (Member)]: sort of scratching my head. Because each of our towns, I mean, Park Mobile actually is hugely influential in this Is

[Sen. Brian Collamore (Chair)]: that a local company?

[Sen. Alison Clarkson (Member)]: I don't know. Oh, no. It's one of

[Sen. Tanya Vyhovsky (Vice Chair)]: those tech pro companies.

[Sen. Alison Clarkson (Member)]: It's one that's a big tech. Yeah. Well, and it's owned by Rise or Risenland. Is that right?

[Sen. Brian Collamore (Chair)]: Is somebody gonna join us?

[Sen. Tanya Vyhovsky (Vice Chair)]: A Rise. A Rise. We're gonna take a break. Yeah. We are. And we sent We

[Sen. Brian Collamore (Chair)]: we haven't done the clock run yet. If Sophie can join us, maybe we could figure a way around then. Yeah. Just send her. If if senator Vyhovsky wants to put that in the bill Thank you.

[Sen. Alison Clarkson (Member)]: Say They they could find it. They would

[Sen. Tanya Vyhovsky (Vice Chair)]: I just I I have found that when you threaten to take away some kind of revenue, people suddenly make themselves available. So Or Okay. Say what?

[Sen. Brian Collamore (Chair)]: Ten minute break, and we'll offer. Be back.