House Education hears testimony on extending Act 173 that lets retired educators return as interim staff while receiving pensions

House Education met March 14 to take testimony on proposed language in a miscellaneous education bill that would extend Act 173, the COVID-era provision allowing a beneficiary of the Vermont State Teachers Retirement System to resume service as an interim educator while continuing to receive a retirement allowance.

The proposal would extend the program’s sunset and modify a current limitation that restricts a beneficiary to serving in a different interim position each renewal period. The debate centered on whether the provision is a narrowly targeted emergency tool that should be renewed or a change that could create long-term pension and administrative risks.

Treasury official Tim Duggan, director of the Vermont Retirement Systems in the state treasurer’s office, told the committee the program has seen very limited uptake and flagged structural concerns. "Our system is not designed to have someone be both an active member and a retiree at the same time," Duggan said, and he noted the retirement board voted unanimously to oppose an extension as drafted. He provided system figures: the retirement system serves about 10,000 active members and about 10,000 retirees, with an average monthly benefit around $2,000. He said the pension funding level rose to about 61 percent at the close of fiscal 2024 and that, under current projections, the unfunded liability is on track to be closed by 2038. Duggan also reported that OPEB (retiree health benefits) has been prefunded recently and reached roughly 11 percent funding, on a path toward 2048.

Duggan told the panel the program’s actual use has been small: seven participants in the program’s first year, five in fiscal 2024 and three in the current year. He said those low counts mean behavioral changes in retiree decisions have not materialized so far, but the retirement system remains concerned about the possibility of different incentives if the program is repeatedly extended. He also described administrative complications, saying the system requires manual interventions to support an arrangement in which a person would simultaneously be treated as both an active employee and a retiree.

Jay Nichols, executive director of the Vermont Principals Association, said the law was intended as a temporary emergency measure so districts could recruit a retired educator to fill a single-year staffing emergency without forcing the retiree to forfeit retirement benefits. "It wasn't designed to fix systemic problems or to allow an individual to continue in a position ... more than 1 school year," Nichols said. He said the association would support an extension that kept the current one-year emergency constraints, but opposed allowing the same person to serve in the same position in consecutive years while drawing a retirement allowance.

Committee members discussed possible drafting options: Representative Taylor and others said they would consider a short extension under the existing conditions, while other members asked whether language could require reapplication each year or otherwise limit consecutive renewals. A committee member asked whether it was feasible to write a provision that could not be extended again; witnesses and members noted that a future legislature could always change or extend statutory language, and that a sunset is the usual mechanism to limit duration.

Colin Robinson of Vermont NEA clarified an important distinction: retired educators may return to work by pausing their pension and serving as active employees (which restarts contributions and service credit), but Act 173 is a different, narrower scenario in which an individual continues to receive a retirement allowance while also serving as an interim educator. "Teachers who retire ... can reenter the classroom if they so choose," Robinson said, "They just can no longer receive their pension" under the standard reemployment approach, which is why Act 173 created the distinct emergency option.

No committee vote on the extension was taken during the March 14 hearing. The testimony left the committee with competing priorities: preserving a short-term tool for hard-to-fill emergency positions while protecting the integrity and long-term funding assumptions of the retirement system. Duggan emphasized the board’s unanimous vote against extending the program as drafted; Nichols emphasized the program’s original emergency purpose and urged keeping the single-year limit in place. The committee closed the hearing to proceed with other business.

Looking ahead, members signaled they will consider drafting changes that preserve the program’s emergency scope (for example, retaining the one-year limitation or requiring a different interim assignment for each renewal) and will weigh treasury and board concerns about administrative burden and actuarial risk before deciding whether to advance an extension in the miscellaneous education bill.