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Committee hears H.567 changes to unclaimed property and Vermont Saves; deputy treasurer says Higher Education Trust Fund will not be diminished
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Summary
The Senate Committee on Government Operations heard testimony April 17 on H.567, which would alter unclaimed property transfers and provide transitional funding to Vermont Saves; Deputy Treasurer David Shear told the committee the plan causes a temporary dip in trust‑fund principal but increases principal and long‑term resources overall, and no vote was taken.
The Senate Committee on Government Operations on April 17 considered H.567, a bill that would change how unclaimed property (UP) is transferred and provide transitional funding to the Vermont Saves retirement‑savings program. Chair opened the session and introduced Deputy Treasurer David Shear and Becky (Wasserman) from the Treasurer’s Office to explain fiscal and operational impacts.
David Shear, deputy treasurer, told the committee the proposal would give Vermont Saves roughly $706,000 over the proposal period to help the program reach self‑sufficiency while the Higher Education Trust Fund would receive more than $3 million under the same timeframe. "We don't believe that this is some nature of rating the higher interest," Shear said, arguing that transfers under H.567 add to the trust fund principal over time even if there is a temporary dip in early years.
Shear described the trust fund's structure and the legal limits on distribution: the fund's principal (which he said stands at about $59,000,000) cannot be distributed and only earned interest is available for scholarships, with statute requiring a 5% distribution when that level of earnings is available. He emphasized that estate‑tax windfalls constitute the largest source of principal growth and that UP transfers are relatively small contributors to long‑term principal accumulation.
Becky Wasserman of the Treasurer's Office described Vermont Saves' contract and fee model. She said the state does not directly pay the program administrator, Vestwell, and that fees are largely charged to account holders: a roughly $26 annual account fee (about $6 per quarter) of which the state currently receives about $4 per account per year and Vestwell receives about $22. She described an asset‑based fee around 0.32% that is split between the consortium and the states and said both fee types are expected to decline as the interstate consortium's assets under management grow.
Committee members pressed for data and clarification about the Higher Education Trust Fund board and recent distributions. Shear said scholarship distributions last year totaled about $1.8 million, with approximately $621,000 allocated to each of the three recipient institutions, and offered to provide the committee with the fund's board composition and recent reports.
Members expressed mixed caution and support: several said the program appears to be operating as intended and praised the Treasurer's Office for keeping startup costs low, while others said they remain concerned about a projected drop in transfers in FY27 and asked staff to follow up with fiscal detail. The committee did not take final action on H.567 on April 17; the chair said more work was needed to "smooth the bumps."
The Treasurer's Office and deputy treasurer offered to provide supplemental materials and data requested by members, including the trust fund's governing committee membership and contract length for Vestwell.
