State to defer $100 million in pension payments
ttp://ctmirror.org/story/state-defer-100-million-pension-payments
Jacqueline Rabe [1]
January 28, 2010
State employee union officials said Thursday they have agreed to a plan by Gov. M. Jodi Rell’s administration to delay $100 million in contributions to their pension fund–a move that shrinks the budget deficit projected for this year, but adds to the state’s $15.8 billion in long-term, unfunded pension obligations.
“It’s better than cutting spending,” said Dan Livingston, the chief negotiator for State Employee’s Bargaining Agent Coalition. “We think a temporary increase in revenue would have been better though.”
The coalition’s acquiescence was a formality: Rell had the right to reduce the payment under terms of an agreement reached last year with SEBAC on concessions to save the state $750 million over two years in return for a promise of no layoffs until July 2011.
That agreement included a provision allowing the state to defer up to $100 million in pension payments if revenue fell $300 million below expectations. The state now has a projected $513 million deficit [2] for the fiscal year that ends June 30.
“We have no choice but to discuss additional measures with them that might be able to help the situation,” said Jeffrey Beckham, legislative affairs undersecretary for Rell’s budget office.
Livingston said the decision to pay $600 million this year instead of $700 million to the pension fund will have no affect on state employees.
“It’s akin to an individual paying $1,500 a month on a mortgage and during tough times cutting that payment back to $1,400 a month,” he said.
Given the current budget problems [3] and Rell’s history [4] of proposing spending cuts to close the budget gap, union leaders said defering the pension payment to protect programs made sense.
“Some programs are just too vital,” said Sal Luciano, executive director of Council 4 of the American Federation of State, County and Municipal Employees. But he added, “Clearly if you continue to underfund state pensions then you are talking about very serious fiscal issues for the state.”
In addition to the $15.8 billion in long-term, unfunded pension liabilities, the state faces a $24 billion liability for retirees’ health care and $18 billion in bonded debt.
However, the delay in pension payments will help Rell and the legislature deal with the problem immediately before them. Rell is due to present her proposal for balancing the budget for this year and fiscal 2010-11 on Wednesday, when the legislature convenes.
[1] http://ctmirror.org/source/jacqueline-rabe
[2] http://www.osc.state.ct.us/public/pressrl/2010/january04.htm
[3] http://www.ctmirror.org/story/briefing-budget-crisis-0
[4] http://www.ct.gov/governorrell/lib/governorrell/defmit_plan_24nov09.pdf
©Copyright 2010 The Connecticut News Project
January 29th, 2010 at 8:01 pm
STATE WORKERS ARE READY TO HELP OUT AGAIN.
E.R.I.P COMING?………Connecticut employee’s have given a very large amount of give backs ,thus doing there part in this crisis. Come this spring open the ERIP to 52-54 year old State employee’s…….Now is the time to Help state government………Do it in one sweep……..
E-MAIL THE GOVERNOR and/or your STATE REPRESENTITIVE ask to OPEN UP THE ERIP AND SAVE CONN. Millions More during this economic crisis.
January 31st, 2010 at 11:50 pm
Mr. Stein’s wishful thinking aside, this business of deliberately increasing the level of unfunded pensions and related liabilities has GOT to stop – REGARDLESS of whether or not the Executive Branch prefers to balance budgets by cutting rather than raising revenue. Instead of diffusing the ticking time bomb that it is, we’re actually increasing the strength of the bomb.
Henceforth we should refuse to enter into such agreements. If politicians then react to budget shortfalls by cutting program budgets and services then so be it – either public outcry will restore the funding by forcing the raising of revenues, or there will be no such public outcry… in which case maybe the programs that were cut were never really needed or wanted by the public in the first place.
February 2nd, 2010 at 2:32 pm
Looks like the Tier I personnel will again be left to make alot of money and wait it out until they can retire. In this office, they don’t have much to do since the philosophy is why train them for new duties when they are leaving shortly. The State could save alot of money by letting them retire early (if the State doesn’t rehire again that is!)
But this State can find money when there is a need for certain things… this would be one of them! Let’s not add to the unemployment numbers and do something that makes sense!