Category Archives: Pensions/retirement

Surrendering Before the First Shot is Fired, and Other Time-Honored Strategeries

One of the consistent themes running through recent Legislatures is Democratic majorities retreating in the face of the slightest pressure — sometimes, even before they feel any pressure at all.

The latest dispiritng entry in this Chronicle of FAIL is a House/Senate task force on public sector pensions. Despite a Democratic majority on the panel, the task force seems determined to rule out possible new revenue sources for the pension funds. If the panel has its way, employees and retirees would absorb the bulk of the pain in a pension reform plan.

As a reminder, both pension plans were massively underfunded from the early 90s to the mid 2000s. In recent years, pension managers issued overly rosy projections on investment returns. That combo platter of ineptitude has resulted in a massive shortfall in both pensions. The Task Force was created by the Legislature last spring, after a reform plan to from House leadership capsized upon launch.

That plan emphasized benefit cuts and higher payments by employees. Leadership abandoned it after furious blowback from the unions. Well, it now seems that the Task Force is bent on following the same course. Members are not even considering measures that Gov. Phil Scott might veto.

Remind me, what’s the difference between legislative Democrats and the Republican administration? Precious little in this case.

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The Bloated Corpse of Bruce Lisman’s Political Career Emerges From the Stygian Depths, Emits a Gas Bubble, Sinks Back Into the Murk From Whence It Came

Oh wait, sorry, that’s Swamp Thing

Once upon a time, there was a retired Wall Street executive named Bruce Lisman*. After his investment firm cratered in the Collapse of 2008, he moved to Vermont and turned his attention to politics. (He should have checked with Rich Tarrant or Jack McMullen on how that tends to work out.) First, he launched a putatively nonpartisan advocacy group called Campaign for Vermont Prosperity. It was usually referred to as “Campaign for Vermont” in an apparent effort to camouflage Lisman’s pro-business agenda.

*Who may or may not have been thoroughly skewered in the movie “The Big Short.”

CFV accomplished little besides spending a goodly portion of Lisman’s fortune. It put out the occasional paper, held sparsely-attended policy forums, did a bit of lobbying, and paid some college students to show the CFV flag at public events. (I dubbed them “Lisketeers.”) There was precious little grass in CFV’s roots.

A few years later, Lisman made the seemingly inevitable run for governor. He spent heavily on his campaign but ran into a buzzsaw named Lt. Gov. Phil Scott, who beat him in the Republican primary by 21 percentage points.

That was the end of Lisman’s political aspirations. He stopped bankrolling CFV, which somehow continued to exist as a center-right, pro-business advocacy group. Some well-meaning people are involved in CFV, but honestly, itbarely makes a ripple in Vermont politics. Whenever CFV does something, I find myself asking “Oh, are you still here?”

CFV’s website is laden with position papers and press releases dated from 2014 and 2015. It does occasionally burp out some new content, as it did last week with a “New Report on Pension Issues.” And though I run the risk of killing a gnat with an elephant gun, I feel compelled to expose this piece of half-assed propaganda. You know, just in case someone takes it seriously.

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A Curious Absence of Drama

As I wrote in my last post, this legislative session looked to be a difficult one at its onset. But there’s been a nearly complete lack of drama, as the House and Senate have made their way through allocating federal Covid relief aid, tackling Covid-related challenges, running the Big Bills smoothly through, and also addressing a notable number of issues that could easily have been kicked down the road till next year. As is common practice in the first year of a biennium.

It’s time to give House and Senate leadership a lot of credit for this. Things are getting done with no untimely eruptions, bruised feelings or twisted arms, no visible splits in the majority caucuses. No muss, no fuss.

What makes this more remarkable is that the two leaders, House Speaker Jill Krowinski and Senate President Pro Tem Becca Balint , are each in their first year. Past leadership changes have usually brought rocky times in Year One. Houses-Senate relations get awfully tetchy.

Not this year. And that’s remarkable.

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Why the Sudden Reticence, Madame Treasurer?

This kinda got lost in the wake of Speaker Jill Krowinski’s retreat on pension reform, but Treasurer Beth Pearce has taken a curious stand on fund management. She seems dead set against a legislative review of the pension funds’ track record.

Normally she’s a fiscal bloodhound, whenever shy about exploring any and all financial issues to the last decimal point and sounding the alarm when she sees fit. But not this one time.

As a reminder, the state treasurer occupies one of seven seats on the Vermont Pension Investment Committee, which makes the investment decisions.

I’d been wondering how the pensions underperformed badly during a historically long bull market. I mean, couldn’t a roomful of monkeys with Bloomberg terminals make money on Wall Street these days? Now, Seven Days’ Kevin McCallum has put numbers to my feeling.

Over the last decade, the S&P 500, a benchmark for the U.S. stock market, enjoyed an average annual return of 13.6 percent. Over that same period, Vermont’s public pension funds earned an average of just 7.2 percent a year from its investments.

That’s not an entirely fair comparison, as McCallum pointed out, since pension funds can’t take chances with their investments. But then he compared Vermont’s funds to other similarly sized public pension funds, and found that Vermont ranked 69th out of 100. Not exactly sterling.

Members of the House Government Operations Committee, who risked political suicide by exploring Krowinski’s reform plan, aren’t happy with the funds’ performance. Committee vice chair John Gannon, who has financial credentials to rival Pearce’s*, called the funds’ performance “horrendous.” Yikes.

*Eleven years at the Securities and Exchange Commission and several at the Financial Industry Regulatory Authority.

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The Speaker Runs for Cover

Well, that didn’t take long.

After steadfastly insisting that Vermont’s public sector pension plans urgently needed an immediate overhaul, House Speaker Jill Krowinski sounded the retreat Friday morning.

It stands to reason, considering the intense backlash her plan received since it was kinda-sorta unveiled on March 24. (Only nine days ago!) Krowinski has now fallen back on the lawmaker’s favorite way to defer tough decisions: a task force.

I guess the situation somehow got a lot less critical.

She deserves credit for gracefully abandoning an unsustainable position. But how did she not see this coming?

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So Many Sad Crocodiles

I tried to watch Tuesday’s kabuki performance hearing of the House Government Operations Committee, but was repeatedly thwarted by a bad Internet connection. (Thanks, Consolidated Communications!) Still, I saw enough to realize what was going on. And enough to be completely fed up with all the expressions of dismay from Democratic officeholders.

The short version: The fix is in. The skids are greased. Following two days of dog-and-pony public hearings, the committee picked up on Tuesday exactly where it left off on Friday afternoon: Charging ahead with a reform plan that will substantially devalue pensions for teachers and state employees.

So, thanks to all those who testified. For your time and trouble, you get a lovely parting gift: our Pension Reform Home Game. Now you can play God with other people’s pensions, just like our legislative leaders!

One thing every committee member can agree on (well, except the three Republicans, they don’t seem to mind at all) is that these are difficult, painful conversations. In the brief statement she read at the beginning of the second public hearing Monday, committee chair Sarah Copeland Hanzas used the word “difficult” three times. “These are really difficult conversations,” “Everyone has had a tremendously difficult year,” “this conversation couldn’t have come at a more difficult time.” In her testimony on Tuesday, Treasurer Beth Pearce said “When we gave our recommendations, we did so with a great deal of reluctance… these are painful.” Other Dems chimed in with similar expressions of saditude throughout Tuesday’s hearing.

Pardon me if I can’t appreciate the self-pity parade. These conversations are waaaaay less “difficult” for elected officials than for the folks who’ll take it in the shorts if this plan (or something like it) takes effect.

Here’s another thing that’s cratering my sympathy for our poor hard-working betters: They’re lying about where we are in the process.

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Phil Scott’s Getting a Free Pass on Pensions, and the Democrats Are Letting Him Get Away With It

Legislative leadership is rightly getting an earful from teachers, state employees and union supporters over the emerging make-workers-pay pension reform plan. But let’s not overlook the fact that Gov. Phil Scott is playing no role whatsoever in devising a solution to this very large problem.

As he has done on issue after issue throughout his governorship, he is sitting back and letting the Legislature do the hard work and take the punishment. Then, after all their blood, sweat and tears, he saunters in, gives a thumbs-up or thumbs-down, and ambles away. If it’s thumbs down, the Legislature gets another try at guessing what will be acceptable to him.

This isn’t my idea of leadership. But who can blame the gov, considering that it works so well for him?

Over and over again, Scott sits out a tough policy debate — and the Democrats let him get away with it. They bargain against themselves. They begin with a position that’s more than halfway to his side, and they only give ground from there. The governor doesn’t get exactly what he wants, but the Democrats get far less. And they look weak in the process.

You’d think the Democrats would have learned by now. But no, here they are doing the same damn thing on pensions — and in the process, betraying one of their core constituencies.

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How to Cost Your Financial Institution a Bunch of Customers in Two Easy Minutes

Submitted for your consideration: Bob Morgan, CEO of the North Country Federal Credit Union. Well, he was as of this writing.

Morgan was the only witness in Friday afternoon’s hearing on public sector pension reform to play the Ebenezer Scrooge role, talking up the urgent need to stick it to state and school employees. All the other witnesses were teachers, state employees and their supporters, all urging the Legislature to hold the pensions harmless.

Morgan’s pro-reform pitch makes sense coming from a member of the Vermont Business Roundtable’s Pension Reform Committee, which he is. But it’s awfully risky for the leader of a financial institution where many teachers and state workers keep their money. After his testimony, Twitter got lit up with calls for people to close their NCFCU accounts.

And eventually, one Twitter sleuth discovered an article describing the generous custom-tailored retirement plan Morgan received from the NCFCU Board. Made it look like a clear case of Steak and caviar for me; hardtack and Alpo for thee.

More on that in a moment, but first, let’s revisit Morgan’s testimony.

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The Reign of the Invisible Man

Harlan Sylvester, large and in charge (Not Exactly As Illustrated)

The House Democrats’ ill-considered pension reform plan was the icing on the cake, the topper in a series of events that expose the fundamentally centrist nature of the party and its officeholders.

And this I trace to the all-encompassing influence of one Harlan Sylvester.

For those just tuning in, Sylvester is a longtime money manager who shuns the limelight — but for decades, he has been the kingmaker of Vermont politics. You don’t get to the top of the heap without his blessing. And it sure seems like the modern Democratic Party has been fashioned according to his fiscally conservative taste.

There have been occasional press profiles about him, and they all describe him the same way. Peter Freyne, 2000: “Mr. Sylvester has had the cocked ear of Vermont governors going all the way back to Tom Salmon in the 1970s.” Freyne quoted then-UVM political science professor Garrison Nelson thusly: “Harlan loves conservative Democrats. He wants to erase the gap between the Democratic Party and the Republican Party.”

Rutland Herald, 2002: “it was Harlan Sylvester’’s considerable influence and strategic skills that helped put [Republican Jim Douglas,] the apparent underdog candidate, in office.”

In 2010, Freyne’s successor Shay Totten described Sylvester as “The most powerful man in Vermont politics.” Totten also quoted Prof. Nelson: “He’s got access to people with real money, and those people with real money will invest in politicians who will protect their interests.”

So that’s Mr. Sylvester, who is in his late 80s but his power has not been visibly diminished. From what I’ve heard, he remains the power behind the throne.

And now let’s look at what the Democratic Party has become.

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Well, it’s not a flaming bag of poo

With no advance warning, the House Government Operations Committee on Wednesday rolled out a reform plan for Vermont’s underfunded public sector pensions. And from the unions’ point of view, it could hardly be worse.

Before I get to the details, I’ll define “no advance warning.” On Wednesday morning, the committee first heard a proposal to restructure the pensions under a single Vermont Retirement Commission. That plan was posted to the committee’s website very shortly before the hearing began. Two lawmakers broadly hinted that they were reading it for the first time, with no chance to digest or formulate questions.

Ditto the pension reform plan. It was posted to the committee’s “Documents & Handouts” webpage only two minutes before its hearing was to begin.

For an issue as complicated as pension reform, this is unconscionable.

Well, it’d be fine if we were at the beginning of a normal legislative timeline with plenty of hearings and back-and-forth and rewrites of the legislation. But as far as I can see, we’re not going to get any of that. As I said in my previous post, legislative leaders are hellbent on enacting pension reform this year. If they’re going to hew to that ambitious timeline, Gov Ops would have to vote out an actual bill within days.

There were a few signs of exactly how rushed these proposals were. Rep. Bob Hooper asked if a cost analysis had been done on the new Retirement Commission. The answer was “No.” Later he noted that the reduction in benefits seemed out of proportion with projected savings; apparently a full fiscal analysis has yet to be done.

Whenever they want to slow-play an issue, legislative leaders usually claim that there’s not enough time to give the issue the scrutiny it deserves. If this pension plan gets fast-tracked, I don’t ever want to hear that excuse again.

After the jump: The grim details.

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