Faced with a teachers’ retirement plan that is 55.97% funded and a growing state budget deficit, Connecticut will hold a public hearing to hear recommendations for the viability of the teachers’ pension system on Wednesday in Hartford. Proposals are due by 4:30p.m. Tuesday.
Last year, the teachers’ contribution rate was raised by 1%, yet the pension’s funding levels still dropped from 59% to 55.97% with $13.1 billion in unfunded liabilities, and the state is obligated to pay the tab by 2032. The unfunded actuarial accrued liability grew by $1.776 billion due to interest and decreased by $1.654 billion due to the amortization payments over the two-year period, according to the November 2017 Connecticut State Teachers’ Retirement System Actuarial Valuation.
The struggling pension fund was historically underfunded at 80 to 85 cents on the dollar until 2008 when the state issued a $2 billion bond to fund the pensions, according to a person familiar with the matter. A bond covenant mandated the state’s full funding of the pension each year thereafter.
Gov. Dannel P. Malloy has made proposals to shift the burden of responsibility partially onto municipalities. His 2018 proposed budget, announced Monday, recommends dropping the assumed rate of return from 8% to 6.9% and adopting a new amortization schedule. With the overall state budget still showing a $244.6 million deficit, Malloy proposed ideas to close the gap, including requiring towns to contribute to the Teachers’ Retirement System. Critics say the contribution requirement could affect tax rates, and argue that municipalities never had a seat at the table when the state negotiated its teacher benefits.
The Teachers’ Retirement System Viability Commission, charged with developing and implementing a plan for the financial viability of the plan, will hold the public hearing at the State Teachers’ Retirement Board office. Those wishing to testify by email or in person are to email Charlene.email@example.com by 4:30 p.m. on Tuesday, February 6, and, if testifying in person, to submit 25 copies of written testimony to the Commission beforehand. The hearing will take place from 3-5 p.m.