Rell proposes ideas to cut retiree costs
By Ed Jacovino
Journal Inquirer
Published: Wednesday, September 8, 2010 12:22 PM EDT
HARTFORD — Increasing retirement ages, limiting raises, and capping pension salaries to $100,000 are among the recommendations Gov. M.
Jodi Rell made Tuesday to save on pension costs.
But labor unions were quick to counter the proposals, calling them “political grandstanding at its most cynical” and saying the recommendations are unrealistic.
Rell — who isn’t running for re-election and will leave office in January — said the recommendations are crucial to closing gaps in funding retiree health benefits and pensions. The state has about $25 billion in unfunded liabilities for retiree health benefits and $9 billion for pensions, her office said.
The recommendations came in a letter to the state Post-Employment Benefits Commission, a group the governor called together in February.
Its next meeting is Thursday. The group is supposed to present a set of recommendations to the legislature.
Rell secured a concession deal in 2009 with state unions that her office has said saved taxpayers $700 million. The deal guaranteed no layoffs for state employees through June 30, 2011. In exchange, it limited raises for two years, instituted unpaid furlough days, created an early retirement program, and raised health insurance premiums and prescription copayments.
Rell now says that deal didn’t go far enough, however. “These are good steps, but they alone cannot resolve the problem,” she said in a statement. “It is time for bold and decisive measures — steps that, in the past, might have been dismissed out of hand or rejected by previous legislatures.”
Included in her recommendations are expansions on changes established under the 2009 agreement. For example, Rell proposed increasing employee contributions to pensions and retiree health benefits. Before 2009, employees hadn’t made such contributions.
She also proposed increasing the “rule of 75” to a “rule of 80.” That would mean the sum of an employee’s age and years of service must be 80 before the employee qualifies for health benefits. Rell also
proposed:
• Eliminating cost-of-living benefit increases if state investments lose money.
• Increasing early retirement to age 60 and the regular retirement age to 65.
• Increasing copays for emergency room and specialist visits.
• Increasing the number of years’ salaries averaged to create a pension salary figure, and capping that pension at $100,000.
Labor unions rejected the proposals as political posturing.
“She has just offered up empty rhetoric before her commission has even taken a vote on final recommendations,” said Salvatore Luciano, executive director of the American Federation of State, County, and Municipal Employees Council 4, and a member of the Post-Employment Benefits commission.
Robert Rinker, another labor union leader, called the recommendations unreasonable.
“The governor’s representatives who negotiated a nearly $1 billion cost-savings agreement last year didn’t put forward changes like she has presented here. They couldn’t with a straight face,” said Rinker, executive director of the Civil Service Employees Association and Service Employees International Union Local 2001.
Rinker also criticized Rell for not contributing state surpluses to the underfunded pension accounts.
Rell last week announced she’d use a $450 million surplus from the prior fiscal year to pay down debt. Paying that into the pension funds would provide better returns, Rinker said.
Rich Harris, a spokesman for the governor, defended the recommendations as part of Rell’s effort to work through the end of her term. Rell or the legislature could take action on the issue before the end of the year, he said.
“This is not a situation where you can wait around and wait for the next administration to take up the problem,” Harris said.
Copyright © 2010 – Journal Inquirer
Join us on Facebook. Fight the Lies.