Connecticut State Treasurer Erick Russell announced Tuesday that $1.3 billion in excess revenues generated in the state’s volatility cap program has been deposited into two public pension funds—$685.1 million to the State Employees Retirement System and $618.9 million to the Teachers’ Retirement System.
The state’s volatility cap shifts excess revenue streams, such as certain tax collections, into a rainy day fund called the Budget Reserve Fund. The goal of the cap is to smooth out any unstable revenue streams, reducing the state’s reliance on one-time cash influxes, a document from Connecticut Voices for Children noted.
“This year’s $1.3 billion volatility deposit strengthens our pension funds, reduces long‑term debt, and lowers annual costs for taxpayers, all while honoring Connecticut’s commitments to retired teachers and state employees,” Russell said in a statement. “These deposits show what disciplined budgeting and smart financial management can achieve. For seven consecutive years, Connecticut has made excess contributions to its pension systems, steadily improving our financial position and protecting the retirement security earned by public servants.”The Connecticut treasury did not respond to a request for comment on how the funds would be allocated within the two pension funds’ portfolios.
Over the past seven fiscal years, the state contributed $11 billion to the pension funds, including $4.1 billion in fiscal 2022, $1.8 billion in fiscal 2023 and $1.5 billion in fiscal 2025. The state estimated it will send another $114 million in operating surpluses to the pension funds by December.
“Budgetary controls implemented in 2017, known as the fiscal guardrails, capture excess revenues in particularly volatile categories and automatically deposit them into the state’s Budget Reserve Fund,” the treasurer’s office stated. “That fund has currently reached its legal cap of 18% of net General Fund appropriations, triggering a provision that directs the remainder of the volatility transfers be used to pay down debt, including in the pension funds. Any budget surplus certified at the close of the fiscal year also gets deposited following the same process.”
Tags: Connecticut