A survey by the Connecticut Business and Industry Association shows that business owners want Connecticut to reform its state retirement benefits by a wide margin. Of the business owners surveyed, 91 percent want reforms to Connecticut’s state pension system, which includes eliminating overtime from pension calculations and moving employees into a 401(k) style defined contribution plan.
Noticeably absent from the latest budget by House Democrats are 11 of the 12 reforms Democratic senators requested as a condition of their approval of the union concessions deal passed on July 31st. In exchange for their votes, the Senators composed a list of 12 cost-saving reforms, which included requiring a vote on every union contract, reforming arbitration laws and ending overtime in pension payment calculations after the expiration of the SEBAC agreement in 2027.
An audit of the Connecticut state employee retirement system released Thursday led to Republican House Leader Themis Klarides, R-Derby, to call for a hearing on the auditors’ findings. The report by the state auditors revealed a number of instances of wasteful spending amounting to millions in overpayments or payments in violation of state statute during the years of 2012 and 2013.
Connecticut’s unfunded pension liabilities continue to grow despite efforts to curb the growing costs to the state. In hard numbers, Connecticut’s pension liability - the money owed to future state workers - has grown from $11.8 billion in 2010 to 20.4 billion in 2016, according to a fact sheet released Thursday by the Office of Fiscal Analysis.
Fringe benefit costs for Connecticut state employees can range anywhere from 56 percent of payroll to 86 percent for judges, family magistrates and compensation commissioners, according to a memorandum from state comptroller Kevin Lembo.
One of the major selling points of the union concessions agreement negotiated between Gov. Dannel Malloy and state union leaders is a new Tier IV hybrid retirement plan, which combines a 401(k) style retirement account with a pension. Proponents claim that this move will save the state money and help stabilize the state employee retirement system, but questions remain as to how the retirement payout would be calculated between the two different plans.