The work of her commission isn’t finished, but Republican Gov. M. Jodi Rell unveiled a laundry list of proposals to lower the state’s unfunded pension liability Tuesday. The proposals didn’t sit well with the state’s labor unions.
Rell’s proposals range from establishing a defined contribution plan for new state workers to capping maximum pensions at $100,000 per year.
“The problem in Connecticut has accumulated over decades, to the point where we have about $25 billion in unfunded liabilities for retiree health benefits and about $9 billion for retiree pensions,” Rell said Tuesday in a press release. “In recent years, I am proud to say, my Administration has taken important steps in addressing this issue.”
The labor unions disagree and say Rell is using the unfunded pension liability to play politics in an election year even though Rell herself isn’t running for re-election.
“She has just offered up empty rhetoric before her commission has even taken a vote on final recommendations,” Sal Luciano, executive director of AFSCME Council 4 and a member of Rell’s Post-Employment Benefits Commission, said. “Looks like the report was already written and you didn’t need any of us after all.”
Rell’s recommendations include increasing employee contributions to both pension and health benefits, in addition to establishing rules such as limiting the percentage of earnings an employee can count toward their retirement benefits. Rell said some of the proposals can be dealt with administratively, while some have to be negotiated with the State Employees Bargaining Agent Coalition.
“It is time for bold and decisive measures – steps that, in the past, might have been dismissed out of hand or rejected by previous Legislatures,” Rell said. “I am urging the State Post-Employment Benefits Commission to join me in supporting these measures as necessary steps to eliminating our unfunded liabilities and preventing them from building up again.”
But the unions say Rell isn’t being honest about her own contributions to the unfunded pension liability. Rell agreed to delay $314 million in payments to the state employee’s retirement plan this year to help balance the budget. However, she also helped negotiate the ‘Rule of 75’ and an increase in contributions for new employees to the retiree health fund. State officials and the labor unions agree the later two will help lower the unfunded liabilities.
“Governor Rell has shown that she’d rather play politics than put forward real solutions for Connecticut middle class families,“ said CSEA/SEIU Local 2001 Executive Director Robert Rinker. “She waited until an election year in order to offer up talking points for Tom Foley’s campaign for governor.”
State Treasurer Denise Nappier wrote in a letter to Rell Tuesday that many of the current problems with the unfunded liability date back to then Gov. John Rowland’s administration in which she served. Nappier said the system set up by the Rowland/Rell administration allows the state to pay less in the early years and much larger amounts in the later years. She also said about $7 billion of the $9.3 billion liability for retiree benefits is attributed to employees hired before July 1, 1984.
Nappier also complained that she had not received the cost analysis for the proposals.
Michael Cicchetti, Rell’s deputy budget director and chairman of the commission, said they were emailed to Nappier’s representative on the committee.
He said the commission will meet two or three more times over the coming weeks to finalize its recommendations. Since forming in February the group has commissioned two actuarial reports, one for the pensions and one for the benefits.
According to an actuarial report completed in June the pension plan holds just under $10 billion in assets, and about $19.2 billion in obligations, which is about 52 percent of its liability.
Click here for our report on the commission’s last meeting.