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Policy Corner: Shades of Malloy: Lamont’s Plan to Push Teacher Pension Costs onto Municipalities

Requiring municipalities to take more responsibility for their teachers’ pension costs makes some sense – if those towns have the power to lower those pensions or the teachers’ other compensation. To do so any other way is old-style taxation without representation, of the sort for which we gave King George the boot.  To add insult to injury, Lamont’s plan also includes a massive transfer of assets from well-run towns to poorly run cities, without any increased accountability or oversight for those cities.  As proposed, then, Lamont’s “cost-sharing” plan does even more harm than Malloy’s would have. 

In 2017, Governor Malloy attempted to force municipalities to pay one-third of the costs of teachers’ pensions, without granting those municipalities any control over the size or cost of those pensions.1 That ill-conceived plan, which divided responsibility from authority, went nowhere.2 

Governor Lamont ran on being a kinder, gentler and wiser successor to Governor Malloy, having learned from his mistakes. We hoped and trusted this meant that he had learned from Governor Malloy’s policy errors. With his TRS-funding proposal, however, he looks set to multiply those errors. 

Governor Lamont is following his predecessor in attempting, in his first budget, to push a portion of the costs of teachers’ pensions onto municipalities. Like Malloy, Lamont does not pass any authority to municipalities to change the size of those liabilities, as by adjusting the size of the pensions they’re to be responsible for or reducing the salaries or other benefits for teachers from which those pension costs are derived.   

This is not only foolish, it is – as every New England schoolchild and every adult who was once a New England schoolchild knows by heart – a violation of one of the motive tenets of the American Revolution. 

This is not only foolish, it is – as every New England schoolchild and every adult who was once a New England schoolchild knows by heart – a violation of one of the motive tenets of the American Revolution. 

As our founders declaimed in justifying their separation from Mother England:  no taxation without representation. No duty to pay without any ability to change the amount owed. But that’s exactly what Governor Lamont is calling for here. He would make municipalities responsible for these costs, but the state would still set them. Further, the state would still forbid the municipalities to delay pay or step increases for their teachers, move subjects out of collective bargaining, or otherwise bring these costs under control. 

This violates not only the Spirit of ’76 but basic and fundamental principles of representative government. The elected officials who make the decisions must be responsible for raising the taxes to fund those decisions. If they aren’t, then the voters get the wrong signals about whom to blame. They see their local taxes raised, and move to punish their municipal officials – without realizing, because the state government has purposely hidden it from them, that it’s the state officers who are responsible and who should carry the responsibility. 

This is an irresponsible way to govern. 

It gets worse. While Malloy’s proposal would have passed a portion of the costs back onto the municipalities proportionally, Lamont’s proposal does not. It charges Connecticut’s “distressed” cities only five percent for its teachers’ pension normal costs, while charging the rest of the state’s towns 25 percent. Additionally, Lamont’s proposal pushes all normal pension costs higher than the state average onto municipalities – but without, as noted, giving those towns any way to tame those costs.   

The governor presents this disparate treatment as a matter of fairness and reasonable assistance to “distressed” cities. For a number of reasons though, it looks like no such thing. 

It must first be remembered that most of the structure of state government and finance is already a wealth transfer from richer families, neighborhoods and communities to poorer ones. The income tax in Connecticut is highly progressive, and provides the majority of state revenues. The state, meanwhile, provides far more support to poor areas than to wealthy ones already. This constitutes a massive wealth transfer. 

Second, this deeply disproportional TRS-subsidy requirement is paired, as the appendices of the governor’s budget reveals, and as Yankee Institute reported on recently,3 with a plan to reduce state educational aid to some Connecticut’s wealthier communities. The two plans together result in a huge transfer of assets from wealthier towns to “distressed” towns.

This massive asset transfer does not, however, come with any obligation that the cities submit to state oversight, reduce their spending, or otherwise work to resolve their distressed status. They receive the extra funding without any additional stipulation. 

As a result we have a program billed as (1) a way to push costs back on their creators that does not allow those purported cost-creators to adjust those costs; and (2) a way for solvent communities to help their distressed neighbors that does nothing to address the underlying causes of distress, and therefore subsidizes that distress. 

This proposal needs either to be dropped or to be reworked. Either the state should shift costs to municipalities along with real and immediate ways to reduce those costs, or it should continue to pay the bill itself. And any further wealth transfer from healthy communities to distressed ones should come with significant state oversight and be tied to radical decreases in spending by those distressed municipalities – or it should not occur at all.

Footnotes: 

1 Governor Dannel P. Malloy, Budget Address For the FY 2018 and FY 2019 Biennium 5 (Feb. 8, 2017), available at http://www.ct.gov/opm/lib/opm/budget/2018_2019_biennial_budget/budgetdocs/002.introduction.pdf. 

2 James Comtois, Connecticut General Assembly Passes Budget that Does Not Shift Pension Costs to Municipalities, Pensions & Investments (Oct. 26, 2017) available at https://www.pionline.com/article/20171026/ONLINE/171029862/connecticut-general-assembly-passes-budget-that-does-not-shift-pension-costs-to-municipalities

3 Marc E. Fitch, Lamont Budget:  Cities Off the Hook for Teacher Pensions, while Towns Pay BigYankeeInstitute.org (Feb. 21, 2019), available at https://yankeeinstitute.org/2019/02/21/lamont-budget-cities-off-the-hook-for-teacher-pensions-while-towns-pay-big/. 

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Scott Shepard

  1. David Martin

    March 23, 2019 10:05 pm

    Where to start?? This article is clearly bias from the beginning and its overall tone. That said:
    First, I agree with the concept that teacher pension cost (terms) need to be revised and controlled. Ideas like eliminating collective bargaining, increasing teacher contributions and forcing new hires to hybrid plans are all good ideas.
    The assertion that the govenors proposal is taxation without representaion may be true on its fave but really that is already the situation as pensions are negotiated at the state level with no input from towns and the wealthier towns contribute the vast majority of funds to cover them anyway so one asks is it really changing?
    Lastly, reduction in ECS reimbursement to wealthier towns does not guarantee that the cities receive more funds than otherwise. That’s an assumption that is not explicit in the govenor’s proposal.
    While I agree teacher pension funds are a critical issue and need to be dealt with if CT has any hope of staving off worsening fiscal woes this article is nothing more than another bias piece to evoke fear and anger from select constituents.

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