Gov. Ned Lamont signs a bill
Gov. Ned Lamont signs a series of reforms to the Municipal Employee Retirement System during a ceremonial bill signing Monday in Shelton. Comptroller Sean Scanlon passes out pens to attendees. Credit: Mike Savino / CTNewsJunkie

Gov. Ned Lamont, Comptroller Sean Scanlon, legislators, and labor leaders touted a bipartisan plan Monday that they expect will save Connecticut’s municipalities $740 million in retirement costs over the next three decades.

During a bill-signing ceremony in Shelton, Scanlon said costs associated with the state-run Municipal Employee Retirement System had gone up 75% over the last five years, making the municipal pensions “unsustainable and affordable” for the 107 cities and towns that rely on MERS.

A new series of reforms, including some adopted by the legislature, will change that by bringing down costs and making MERS sustainable in the long run. Key among those is a re-amortization of the pension debt from 17 years to 25 years, spreading out the costs over a longer period.

Scanlon brought together municipal leaders and municipal employee unions in the spring to negotiate a compromise.

“There are only so many times that we can tell a town or a city that we have to increase that without them having nowhere else to go,” he said, noting municipalities are limited in their ability to generate revenue.

They came up with a six-point plan that included the re-amortization of the debt and changes to cost-of-living adjustments, among other things.

MERS previously had a 2.5% minimum COLA bump, regardless of inflation. That minimum has been removed in a change that means COLA should more accurately reflect inflation and investment performance.

To win over the employee unions, the agreement raised the COLA cap from 6% in a given year to 7.5%

The deal also incentivizes retirement-eligible employees to continue working.

Based on the changes, participating cities and towns are expecting to save a combined $33 million in the current budget year.

“It’s being able to try to control costs and providing a community that’s affordable, consistently affordable,” said Shelton Mayor Mark Lauretti, adding that his town stands to save $350,000 just in the current budget year.

Employee unions also felt compelled to shore up the MERS system and make it sustainable. 

Brian Anderson, AFSCME Council 4’s legislative and political coordinator, said he hopes the changes will encourage municipalities to offer pensions to more employees, especially at a time when they’re having a hard time hiring for certain jobs.

Organized labor believes that every working American should have a pension, and this bill is a step in the right direction, Anderson said. 

The deal required approval from both the legislature and Gov. Ned Lamont.

“I love what we’re doing because pensions are a promise that we made to our employees,” Lamont said during Monday’s bill-signing ceremony. 

He said the agreement allows the state and its municipalities to keep that promise while also giving taxpayers confidence that the costs won’t drive property taxes higher.

Two Republican legislators, Reps. Holly Cheeseman of East Lyme and Jason Perillo of Shelton, were also on hand for the signing. They celebrated the collaboration and bipartisan talks that led to the reforms.

“The services provided by municipal employees are so important, they deserve what they were promised,” Cheeseman said. “But municipalities need to be kept financially whole.”

EDITOR’S NOTE: The original version of this story listed the savings amount at a higher amount than $740 million. The story has been changed to reflected the updated estimate.