Vermont § 311a - Public retirement benefits; unfunded liability; findings; purpose; intent

§ 311a. Public retirement benefits; unfunded liability; findings; purpose; intent

• (a) Findings. The General Assembly finds: (1) The actuarially determined employer contribution (ADEC) for the Vermont State Employees’
  Retirement System (VSERS) has increased by an annual growth rate of 12.1 percent between
  FY 2009 and FY 2023, and the funded ratio of the VSERS has declined from 94.1 percent
  from FY 2008 to 67.6 percent by year-end FY 2021. (2) The ADEC for the Vermont State Teachers’ Retirement System (VSTRS) has increased by
  an annual growth rate of 13 percent between FY 2009 and FY 2023, and the funded ratio
  of the VSTRS has declined from 80.9 percent from FY 2008 to 52.9 percent by year-end
  FY 2021. (3) The General Assembly has appropriated sufficient funds to fully pay the ADEC for both
  VSERS and VSTRS at the recommended amounts since FY 2007 and throughout the current
  amortization period. (4) Since FY 2009, the accrued liabilities of VSERS and VSTRS have grown faster than the
  assets of each plan, resulting in a gap between the expected payout of future benefits
  and the assets VSERS and VSTRS have to pay out those benefits to retired State employees
  and teachers. This gap is also known as the unfunded liabilities for VSERS and VSTRS. (5) In FY 2015, the General Assembly created the Retired Teachers’ Health and Medical
  Benefits Fund, and health care premiums are paid for on a pay-as-you-go basis from
  this Fund. (6) The FY 2022 State budget expense for retiree health care benefits, known as other
  postemployment benefits (OPEB), for State employees was approximately $37.2 million
  and $35.1 million for teachers. (7) As of the beginning of FY 2022, the State’s unfunded liabilities for health care benefits
  for retired State employees and teachers is $2.75 billion. (b) Purpose. The purpose of this section is to provide economic stability for retired State employees
  and teachers by maintaining the financial health of VSERS and VSTRS, while also addressing
  the unfunded liabilities in the State’s pension and OPEB plans and the decline in
  the funded ratios of those retirement systems. (c) Intent. (1) It is the intent of the General Assembly to address the unfunded liabilities and decline
  in funded ratios of VSERS and VSTRS by implementing several measures, including: (A) continuing the General Assembly’s policy since FY 2007 to fully fund the actuarially
  determined employer contributions rates for the VSERS and VSTRS at the amounts recommended
  by the respective boards of each retirement system to the General Assembly each year;
  and (B) beginning in FY 2024, annually funding an additional payment to the actuarially recommended
  unfunded liability amortization payments for VSERS and VSTRS that will increase to
  not more than $15,000,000.00 each year to each retirement system and remain until
  the VSERS plan and the VSTRS plan respectively reach a 90 percent funded ratio. (2) It is also the intent of the General Assembly to prefund other postemployment benefits
  to create more security and predictability in health care benefits for retired State
  employees and teachers. (Added 2021, No. 114 (Adj. Sess.), § 1, eff. July 1, 2022.)