The Appropriations Committee voted in favor of a deal to level the pension payments to the State Employees Retirement System.
The state’s annual contribution to the pension fund is currently $1.5 billion. Under the new agreement negotiated by the Gov. Dannel P. Malloy and the State Employees Bargaining Agent Coalition it would increase at the most to around $2.3 billion annually. That’s far less than the $6 billion annual payment that would become necessary if the state opted not to act.
While there seemed to be some agreement that the plan would be good for Connecticut, some lawmakers really wanted to know if the Malloy administration planned to push the state employees to reopen the agreement they made in 2011 in order to renegotiate how pensions for state employees are calculated. But they were unable to get an answer.
Lisa Grasso Egan, Undersecretary for Labor Relations at the Office of Policy and Management, said that’s not something they can share with lawmakers.
“When we have our labor discussions, we do keep our conversations confidential,” Egan said.
Senate Republican President Len Fasano, R-North Haven, said he wants to know if the administration asked to open up that agreement. He said he wasn’t asking for the answer to that question.
Fasano said his Republican colleagues want to look at the issue of pensions holistically. He said it’s difficult to evaluate the plan in front of them without knowing how other discussions or negotiations may impact the plan in the future.
Fasano voted in favor of the plan at this moment, but he said he reserves the right to change his mind before the vote in the Senate.
The agreement extends the pension amortization window from 2032 to 2046, which results in higher overall payments over the life of the debt, but those changes are outweighed by other changes, such as lowering the assumed rate of investment return from 8 percent to 6.9 percent, according to Moody’s analysts.
Sen. Terry Gerratana, D-New Britain, said this pension funding problem occurred many years ago and “I believe today’s proposal is a reasonable way to deal with this issue.”
She said they don’t have time to point fingers at past administrations or union leaders for allowing this to happen, “nor do we have time to wish for an alternative reality where our unfunded accrued liability was at a more reasonable level.” She said they need to support the proposal to begin to fix the problem.
However, Rep. Melissa Ziobron, R-East Hampton, said she still doesn’t have enough information to make a decision. She pointed out that Barnes emailed her more information at 1 p.m. Tuesday in the middle of the public hearing.
She said she may review the additional data and change her mind.
But when it comes to changing benefit levels of employees or how pensions are calculated to stop employees from being able to rack up overtime in the last three years of their employment to boost their pension payments, then “we are just kicking the can down the road,” Ziobron said.
Those who attended the public hearing continued to describe what the state was doing as refinancing a mortgage.
“From a budgetary standpoint this will help provide more predictability and sustainability going forward as we work to meet our long term contractual obligations in the coming years,” Appropriations Committee House Co-Chair Toni Walker, D-New Haven, said. “It is not dissimilar to refinancing a home to make payments more affordable while still fully meeting your responsibilities.”
Suzanne Bates, policy director at the Yankee Institute, said it is like refinancing a mortgage, but there also needs to be a realization that the house is too expensive for the state to keep up with the payments if no future changes to the underlying benefits are made.
Sen. Paul Formica, R-Niantic, who co-chairs the Appropriations Committee, said he would like to discuss pension reforms.
Lawmakers have introduced several bills this year to change how pensions are calculated.
In previous years with a Democrat-controlled House and Senate, none of those bills would be raised. However, the margins have changed and with Republican gains in the House and an evenly divided Senate it’s likely the some of the proposals will get a public hearing.
The House and Senate expect to vote on the pension deal approved Tuesday by the Appropriations Committee on Feb. 1.