ST. ALBANS — Incumbent Treasurer Beth Pearce is running on her record since her appointment to the position in 2011.
Prior to that, she served eight years as the state’s deputy treasurer, a job she moved to Vermont to take.
“I’ve done 43 years of public service, public finance,” Pearce said. “This is the best way I can serve Vermonters.”
Much of the job involves overseeing the state’s accounting, such as the $1.2 billion in Covid Relief Funds which arrived in state coffers from the federal government earlier this year. It was the largest deposit the state had ever received and her office had to work out protocols with the state’s banks around the handling of those funds, such as notifying the banks when the state planned to make a large withdrawal.
Vermont was fortunate that it hasn’t had to borrow money during the crisis. “We had adequate cash reserves and our cash position was very strong,” Pearce said.
Pearce credited the legislature and the administration with maintaining the state’s reserves, or Rainy Day Fund, a policy Pearce has long advocated for.
In her role as President of the National Association of State Auditors, Comptrollers and Treasurers, a position she recently departed when her term expired, Pearce said she was able to get together a national group to make recommendations on the handling of Covid assistance that benefitted Vermont and other states.
The treasurer’s office assisted the Dept. of Labor with getting checks out to Vermonters during the early days of the shutdown, as well as processing the retirements of 498 teachers, state and municipal workers who opted to retire during the pandemic, a much larger number than a typical year.
There is also the ABLE program, which allows Vermonters with disabilities to save money for disability-related expenses tax free. Even with the pandemic, her office was able to get the program up and running, Pearce said.
Work also continues on the Green Mountain Secure Retirement Plan, which a study committee led by Pearce recommended and the legislature approved in 2017. The plan will assist small businesses with fewer than 50 employees with providing retirement savings for their employees.
Pearce’s opponent, former Franklin County legislator Carolyn Branagan, has focused her campaign solely around another issue: the state’s pension and health care funds, which collectively have a deficit of $4.6 billion.
Half of that total is in health care for retirees. The other half is pensions for teachers, state and municipal employees. The teachers portion of the fund accounts for $1.5 billion of the hole in the pension fund.
Each year actuaries analyze the state’s current pension payments, projected future payments and the currently available funds and make a recommendation to the state of how much needs to be placed into the fund. Prior to 2007, the state was routinely placing less than the recommended amount into the fund. Since 2007, it has paid each year’s obligation in full, but the legacy of the years of underfunding needs to be addressed.
“There is no silver bullet,” Pearce said. “We’ve been able to make improvements.”
One of those has been the handling of health care expenses. Previously, the health care premiums for retired teachers were being paid out of the pension fund. That took money that could be invested and earning interest out of the fund. Pearce’s office estimated the loss at $480 million through 2038. She convinced the legislature of the need to start paying those premiums outright rather than charging them to the pension fund. Now the annual payments are made by schools, the state and a federal program, the Employer Group Waiver Program.
Billing the pension fund for the health care premiums was “a collective mistake,” said Pearce, with no single party responsible.
The General Fund had also made a loan to the health care fund, which is about to be paid off following two years of surpluses in the fund, according to Pearce. Once the loan is paid off, there will be funds with which to make investments to help pay future costs.
In addition, schools are now paying more into the fund when they hire someone new than they have in the past, Pearce said.
She has also worked with state employees to increase employee contributions to the pension fund, as well as working to shift the retirement age for teachers later and change the eligibility for health care.
The pension fund does have $5 billion in assets, and sixty to seventy cents from every dollar being paid to current retirees comes from interest, Pearce said.
The state’s investments are overseen by a committee on which Pearce sits. “We have an investment allocation process,” she said.
Investments are reviewed by an outside consultant who does not gain financially from the state’s investment decisions. Both actuaries and the auditors of the fund also look at those investments, Pearce said.
“I think an objective, data-driven approach is required when looking at these issues,” she said.
The funds are also subjected to regular risk assessments, which Pearce described as rigorous.
Although the state has not underfunded the pension fund in 13 years, should the state do so, the administration is required to write a report with an explanation, Pearce said.
Pearce has also been involved in many of the state’s most challenging issues including affordable housing and Lake Champlain clean-up. Her office is currently at work on housing recommendations she hopes will allow the state to make needed investments in housing while avoiding taking out a second bond to do so. “I want to be judicious in our use of bonds,” she said.
Although she herself is a Democrat and “proud of our Democratic values,” she views the work of her office as non-partisan. “We leave our politics at the door,” Pearce said. “We’re an equal opportunity data provider.”
The goal is to assist the other parts of state government, including the governor’s office and the legislature, and “ultimately the taxpayer.”
Asked what else she wanted Vermonters to know about the work of the treasurer, Pearce answered, “I have the best staff in the state.”