The Trillion Dollar Gap: Vermont

Vermont needs to improve how it is managing its long-term liabilities for both pensions and retiree health care and other benefits. The Green Mountain State has funded 88 percent of its total pension bill—above the 80 percent benchmark that the U.S. Government Accountability Office says is preferred by experts—and has $461.6 million in unfunded liabilities.

From 2003 to 2006 the state fell behind in paying its actuarially required contribution each year; however, it recently has gotten back on track. In hopes of boosting assets, Vermont passed legislation in 2008 that increased the rate of employees' contributions through July 1, 2019. The state also raised the retirement age and tweaked early retirement penalties and cost-of-living adjustments.

Meanwhile, Vermont has set aside only $3.7 million—less than 1 percent—of its total $1.6 billion bill coming due for retiree health care and other benefits. In 2008, the state increased eligibility requirements for retiree health care subsidies and the minimum age for normal retirement.