February 11, 2016

Leading Vermont Voices Push Back on Shumlin’s Proposal To Divest State Pensions

Vermont Governor Peter Shumlin (D) is leading the push for state pensions to divest from fossil fuels, but voices across the state—from Vermont’s State Treasurer to state pension fund organizations—are warning that fossil fuel divestment proves to be a money-losing strategy with no climate upside.  In fact, Gov. Shumlin’s proposal could put millions at stake for retirees, many of whom depend on the pension’s performance for financial security.

Here is what they’re saying:

Beth Pearce, Vermont State Treasurer:

“From our end, legislating investments is bad practice…My first priority is to protect the 49,000 active, vested and retired members of the system, the beneficiaries, and the taxpayers who put dollars into that system. For me, I don’t think [divestment] is the best approach.” (January 17, 2016)

Thomas Golonka, VPIC Chair; Beth Pearce, Vermont State Treasurer:

“We do not believe that legislating investments is an appropriate course of action.  Investment decisions belong exclusively with the Vermont Pension Investment Committee (VPIC)…whether investing in renewable stock or divesting from energy or any other sector—legislating those decisions is not good investment policy.” (February 3, 2016)

Thomas Golonka, VPIC Chair:

“The money is owned by the pension beneficiaries, it’s not owned by the state. So we really have to be careful to make sure we’re doing our fiduciary duty for the pension fund.” (February 23, 2016)

Vermont State Employees Association:

“…members of the Vermont State Employees’ Association, Inc. (VSEA) Retirees’ Chapter recommend to the members of the VSEA Board of Trustees and VSEA Council that they do all in their power to prevent the passage of legislation that would enable members of the Vermont Legislature to be involved in the decision of how or where the monies in the Vermont State Employees’ Pension Fund be invested. (Resolution adopted December 16, 2014)

Vermont Retired State Employees Association:

“…the Board of Directors of the VRSEA, Inc., on behalf of its retired members, support that the responsibility to make prudent investment decisions in accordance with appropriate statutory and fiduciary requirements, continue to be vested in the Vermont Pension Investment Committee and not the legislature or any other entity.” (Resolution adopted December 2, 2015)

Vermont Troopers’ Association:

“It is the responsibility of Vermont Pension Investment Committee, and not the Vermont Legislature, to decide which ethically appropriate investments will provide the best return on investments, within an acceptable range of risk.” (Resolution adopted January 29, 2016)

Vermont State Labor Council, AFL-CIO:

“…the Vermont State Labor Council, AFL-CIO on behalf of its retired members, support that the responsibility to make prudent investment decisions in accordance with appropriate statutory and fiduciary requirements, continue to be vested in the Vermont Pension Investment Committee and not the legislature or any other entity.” (Resolution adopted February 9, 2016)

Professional Fire Fighters of Vermont:

“Monies invested into VMERS [Vermont Municipal Employees Retirement System] are not the property of the State of Vermont or the general citizenry.” (Resolution adopted February 8, 2016)

Vermont State Teachers’ Retirement System:

“The Board of Trustees of the Vermont State Teachers’ Retirement System (VSTRS) on behalf of its members, support that the responsibility to make prudent investment decisions in accordance with appropriate statutory and fiduciary requirements, continue to be vested in the Vermont Pension Investment Committee and not the legislature or any other entity.” (Resolution adopted February 9, 2016)

Vermont Municipal Employees’ Retirement System:

“…the board voted to not support any restriction on investments to preserve fiduciary responsibilities to participants and their concern for the Vermont tax payer.” (From meeting minutes, July 28, 2015)

The Vermont-National Education Association:

“…supports not having the Legislature impose any investment requirements on the retirement systems.” (Motion adopted September 23, 2015)

Representative Robert Bancroft (Chittenden-8-3):

“…it would be imprudent, and violate fiduciary responsibility, to risk millions in returns to make a political point about fossil fuel use. In fact, the very reason the VPIC was set up is so that public funds could be stewarded by an independent body, not susceptible to political pressure and whims.” (February 10, 2016)

Sen. Dick Mazza (D-Colchester and Grand Isle County), Sen. Bobby Starr (D-Essex and Orleans County), Sen. Peg Flory (R-Rutland County):

“While the proposal might have the semblance of tackling ‘big issues,’ by making a ‘statement,’ it sadly boils down to lost returns and no measurable impact of the fossil fuel industry or climate change. We need a practical approach to governance in Vermont that puts the taxpayers, retirees, employees and their families first.” (February 18, 2016)

Rob Roper, Ethan Allen Institute President:

“It is wrong, and costly, to violate fiduciary responsibility to pensioners, students, and Vermont’s citizens in general. It is even worse to cloak a political agenda under the guise of environmental responsibility, when it is clear that divestment will not address climate change.” (February 8, 2016)

Professor Brad Cornell, Caltech:

“This pushing of divestment is in my mind a pure diversion.  And an unfair one, because it doesn’t do anything positive, and it imposes costs on retirees and other people who depend on these portfolios, to no benefit.” (February 10, 2016)

Ronald D. Liebowitz, Former Middlebury President:

“Given its fiduciary responsibilities, the board cannot look past the lack of proven alternative investment models, the difficulty and material cost of withdrawing from a complex portfolio of investments, and the uncertainties and risks that divestment would create.” (August 28, 2013)

George Clain, Barre, Vermont Resident:

“…if these politically motivated ‘investments’ perform poorly for Vermont state retirees, well, those are the breaks. This is why the Legislature set up a state pension board — to keep our state retirees’ futures from being held hostage to the political whims of a few.” (February 9, 2016)