Tag Archives: John Gannon

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.

Continue reading

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.

Continue reading