Lawmakers briefed on how teacher workforce shifts could affect Vermont pension and retiree-health costs

Chris Root of the Joint Fiscal Office briefed the legislative Ways & Means committee on how changes in the size and retirement behavior of Vermont’s teacher and school workforces could affect state pension and retiree‑health liabilities.

Root said the state teachers retirement system (VSTRS) provides a defined‑benefit pension calculated using years of service, average final compensation (the three highest consecutive years), and a benefit multiplier (1.67% for the first 20 years, higher thereafter), with a maximum benefit of 60% of AFC. He noted the system’s automatic cost‑of‑living adjustment is set at 50% of the year‑over‑year change in the Consumer Price Index, with a statutory floor of 0% and a ceiling of 4%.

"We're now cashflow positive," Root said, explaining that contributions now exceed benefit payouts from all sources, which reduces pressure to sell assets at disadvantageous times. He added that the teacher system is nevertheless mature, not fully funded and remains sensitive to demographic and actuarial changes.

Why this matters: the size and composition of the active workforce drive the annual "normal cost" of benefits and influence the state employer contribution known as the Actuarially Determined Employer Contribution (ADAC). Root said the current normal cost (including administrative costs) is about 11.7%…