Treasurer Pearce Announces S&P Global Ratings' Rating Affirmation and Improved Credit Outlook for State of Vermont Bonds | Office of the State Treasurer Skip to main content

Treasurer Pearce Announces S&P Global Ratings' Rating Affirmation and Improved Credit Outlook for State of Vermont Bonds

August 19, 2022

Montpelier, VT – On August 19, 2022, S&P Global Ratings affirmed the State of Vermont’s AA+ (the second highest) general obligation bond ratings and revised the rating outlook from negative to stable. Vermont is still the highest rated New England state.


Vermont State Treasurer Beth Pearce praised collaborative efforts among the Treasurer’s Office, the General Assembly, and the Governor, for contributing to the ratings improvement: “I am pleased with the outlook revision from negative to stable from S&P and that we are beginning to see the fruits of investments and critical retirement reforms achieved by Act 114. The ratings affirmation also emphasizes the importance of not only continuing to adhere to our record of sound financial management and budget practices, but also addressing our workforce and demographic trends.”


Responding to the announcement, Governor Scott noted: “This is good news, and a sign that our work to strengthen our fiscal fundamentals is moving us in the right direction. I want to thank Treasurer Pearce for her stewardship in this area, as well as for her partnership over the years to address some significant financial challenges.”


In the ratings report, S&P wrote that the improved outlook is attributed to recent shifts in demographic trends, “retirement reforms designed to significantly reduce unfunded liabilities,” and historical credit strengths including “regular forecast updates, annual midyear budget adjustments, consistent reserve levels across economic cycles, and debt affordability oversight.” Vermont received the highest score possible in the financial management category.


For the first time in a decade, in 2021, Vermont’s rate of population growth was greater than that of the nation. S&P hypothesized that this represents “an uptick in in-migration related to the COVID-19 pandemic because low population density and outdoor recreation opportunities attracted those who could work remotely to the state.” S&P also praised Vermont’s demographics initiatives including “funding for various programs related to housing, workforce and economic development, and childcare [that] have totaled $150 million, $140 million, and $40 million, respectively.”


Act 114, passed in the 2022 legislative session, is estimated to save $2 billion in combined pension and OPEB (retiree healthcare) unfunded liabilities associated with the Vermont State Employees Retirement System (VSERS) and the Vermont State Teachers’ Retirement System (VSTRS).


“Our goal is to maintain a strong AA rating and eventually achieve a AAA. Today’s rating from S&P is a welcome step, but we must continue to work together on solutions to Vermont’s challenges and upholding the processes of our credit strengths,” said Treasurer Pearce.