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Barrels of ink have been spilled on Connecticut’s budgetary problems and their related and systemic causes. The focus has sharpened with new Gov. Ned Lamont’s insistence on instituting highway tolls and expanding the sales tax, while putting the state on a so-called “debt diet.”
While the new taxes and fees will affect just about everyone (except yours truly, who rarely drives on the roads that Lamont proposes to tax), towns and cities are taking special notice of Lamont’s proposal to offload some of the costs of funding the pensions of the state’s current and retired public school teachers.
The proposal would hit towns right where it hurts — but not equally or even proportionately. Lamont wants most of the towns to contribute 25 percent of teacher pension costs next year, with that percentage rising steadily until it hits 100 percent by 2022.
In apportioning the misery, Lamont is taking the Robin Hood approach. Wealthier towns that compensate their teachers at a rate higher than the state average will pay a greater share of funding the pensions, while 25 so-called “distressed municipalities,” would pay only five percent. I guess — and I’m channeling George Orwell here — all towns are equal but some towns are more equal than others.
In its Sunday edition, the Republican-American newspaper published a handy and comprehensive guide to the teacher pensions, their history and how much Lamont’s proposal would cost individual towns at a time when many are already being hit with reductions in educational cost sharing grants from the state. Unfortunately, the report is behind a paywall, but if you’re really interested in the topic, it’s well worth the $1 it costs to access full content for the day.
Connecticut is one of the few states — if not the only state — in the nation that has sole responsibility for funding the pensions of its public school teachers. So it’s no wonder that the pension fund has been chronically underfunded over the years. After all, fully funding those pensions would crowd out spending for other programs that are more politically popular. Better to fund school construction, for example, than stock a pension fund that will sit unnoticed in the background. So instead, lawmakers simply take money out of existing funds to pay those retirees.
While it should be noted that teachers themselves contribute 7% of their salaries to the pension fund, annual costs of the program to taxpayers are staggering. There is currently an unfunded liability of $13.2 billion. The state’s annual contribution to the teachers pension program is expected to rise to more than $3 billion by 2032. For a little perspective, this appalling mismanagement has occurred in a crummy little state with an annual budget of only about $21 billion a year.
In theory, I don’t have a problem with shifting some of the costs onto municipalities. The problem is it will do nothing to reduce the tax burden on the average Connecticut resident. Towns will either have to raise taxes to cover the amounts owed to the pension funds or cut programs or teachers — or all of the above. Ironically, some of those cuts might not even be permissible because of state mandates such as the dreaded minimum budget requirement, which requires public school districts to spend at least as much as they did the previous year. And if they want to lay off teachers, there is little flexibility. In deciding whom to cut, school officials will have to start at the bottom of the pay scale because of the first-hired-last-fired philosophy enshrined in state law.
And here’s another bitter irony, unlike their colleagues in 37 other states, Connecticut’s public school teachers do not pay into the Social Security system. A skilled researcher could probably write a book about it, but the long-and-the-short-of-it is in the early 1950s members of the Teachers Retirement System voted against joining the Social Security system. Subsequently, the state’s largest teachers union twisted the arms of lawmakers in Hartford and convinced them to forbid TRS members from holding another referendum on the matter, according to the state Office of Legislative Research.
So the General Assembly essentially forbade public school teachers from participating in Social Security. I cannot find a reason beyond the fact that it was the wish of the Connecticut Education Association. But common sense tells us that the burden on taxpayers to fund the pensions would be less if teachers were paying into Social Security like the rest of us and were eligible to receive those same benefits upon retirement.
So many of the problems associated with the underfunded teacher pensions are the fault of state itself that is simply maddening that the new governor is trying to shift the burden of paying for the system onto the towns.
At this point, the only support for Lamont’s proposal that I can see comes from the Democratic leadership in the General Assembly. Rank-and-file lawmakers and municipal leaders are largely opposed. My advice to Gov. Lamont: if you want to bring those reluctant public officials onboard, sweeten the pot and give cities and towns the option of enacting their own local-option sales taxes on meals and hotel rooms, as is permitted in Massachusetts and several other states. That way, they could find a way to pay for the whopping bill you want to send them, while reducing upward pressure on the regressive property tax.
Contributing op-ed columnist Terry Cowgill lives in Lakeville, blogs at CTDevilsAdvocate.com and is managing editor of The Berkshire Edge in Great Barrington, Mass. Follow him on Twitter @terrycowgill or email him at email@example.com.
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