As CT Mirror reporter Keith Phaneuf writes, Connecticut’s public employee pension fund is a mess with a proposal pending to defer billions of dollars in contributions for at least 15 years. Municipal governments as well, including Bridgeport, are grappling with pension fund obligations stretching budgets. The issue will be a key component of the current session of the state legislature.
From Phaneuf:
Connecticut’s pension fund suffers from inadequate savings policies that date back more than seven decades.
State government saved nothing between 1939 and 1971–and very little until the early 1980s–to cover pensions promised to state employees. Even after it began saving in earnest, it frequently contributed less than the full amount recommended between the early 1980s and 2011.
The cost of these past actions can be seen in the current budget and in future projections.
For example, 82 percent of this year’s $1.57 billion payment into the state employees’ pension fund, almost $1.3 billion, is to cover contributions or investment earnings not made or achieved in the past.
Full story here.
JML, maybe you can explain to me why the State would allow the BFD and the BPD to come into the State pension and allow them to receive a pension based on any of their three best years with overtime and other fringe benefits included. They knew they were in dire straights with funding and had to know both only let them retire with pensions that reflected only their base pay, so why would they add millions of dollars to the State pension? So I guess I’m asking you, what was the upside for the State?
Mr. Day, good question. The short answer is this references the State Employees Retirement System (SERS) and its low funding level. The pension fund the active BPD and BFD members entered, as well as many other city employees, is known as the Municipal Employees Retirement System (MERS). Two different funds, different sources of money, and different funding levels. Per the article Lennie cited, SERS is not properly funded at less than 40%. The last I looked the MERS funding levels are in the high 80% range. MERS exists to reduce duplication of overhead for each Municipality to administer pension funds, and had has been in existence for at least 50 years. There is no benefit, nor detriment, for the State to have additional municipal employees enter the existing MERS fund.
The reason the SERS fund has such poor funding levels should be very familiar to you. Just like the City of Bridgeport Pension Plan A was not funded separately, the State put in no money towards SERS for many years.
Smart Union leaders will get behind pension reform to ensure a sustainable plan, but as a component of reform include language to ensure governments may no longer delay making their pension commitments on time. Only the taxpayers lose when government fails to meet their obligations in a timely manner, wasting likely investment gains.
Actually Donald, the most obvious upside was for the officers in the Police Department especially during the years that staffing had decreased so much, internal overtime was plentiful and there was always external overtime to fill your dance card beyond the regular hours.
The expense of retirement benefits based on highest three years of overtime earning is TOTALLY the responsibility of Bridgeport taxpayers, even if the benefits are paid from a State plan. And in the last union contract, the Finch administration agreed to terms that would not allow the City to raise the charge for External Overtime to UI, Gas company, etc. when flagmen are used, so all of that expense, so well hidden from the public, is part of an additional City expense that was part of the $20 Million Ganim faced because of Finch’s lack of transparency.
Isn’t it more important to understand who won and who lost in this negotiation? And what is the exact expense? And is there anything smart we can do about it going forward? Time will tell.
Donald, the BFD and BPD are now in the Municipal Employee Retirement Fund, which is managed by the State Treasurer’s office. It is a different fund. Participating municipalities are required to make payments to ensure its solvency. Bridgeport taxpayers will pay for the higher cost because of the overtime factor.
The people of Bridgeport can thank Tom McCarthy and Larry Osborne for negotiating a contract with the police and fire departments that will allow employees to retire with a percentage of their three best earning years. Example, let’s say a patrolman whose annual salary is approximately $60,000 per year, under the old pension system that patrolman would receive a pension of $30,000 under the new pension system this same officer if he average $100,000 a year for three years will now retire at $50,000 per year.
*cough*
If only there were a way to get billions of dollars of revenue easily.
*cough*
Smoke ’em if you got ’em.
The only answer to this conundrum is MORE MONEY!!!
That can only come from high-value economic development at the state and municipal levels. The SW wedge, Gold Coast/Stamford Greenwich, can’t do it for whole state.
Fun Quiz Question(s): I. How many Bass Pros would it take in Connecticut to generate the tax revenue needed to meet all the legally required annual pension funding for the state and all of its municipalities? (How about just considering Bridgeport in this regard?) II. How much more income tax and sales tax, at present rates, would be needed to meet state pension obligations? III. How does the state plan to create the means for securing the revenue needed to meet these obligations? (One solution: Merge with Massachusetts or NY, where Connecticut businesses and people seem to want to be anyway.)
When Mayor Finch and the City admin moved the still active members of municipal pensions “A” and “B” to the State program, they also fought the Pension Plan B Commissioners for over $20 million the State needed to “vest” them. There were only 64 retired Pension Plan B retirees, and I believe there was over $74 million in the nicely funded pension plan coffers. The Plan “B” Commissioners, doing their fiduciary duty, voted against letting the City take money away from a pension that had no more active members contributing every week from their paychecks. The Finch admin threatened the Commissioners with replacement if they didn’t vote for giving up the $20-plus million, with the City Attorneys promising Bpt would replace any needed shortcomings in the future, and two of the Commissioners, one the Chairman, resigned in protest, the rest and replacements voted to give the State the money. Business as usual.
Thanks Nick, now I remember that and I believe Jim Morley and Rosenberg quit in protest. By the way how you been, man?
Thanks Nick, and yes Don it was those two who protested. Stew Rosenberg was someone I never cared for but when he made his stand with Jim I was very proud of both of them. I happen to run into Mr. Rosenberg a while back while shopping and I stopped and thanked him for what he did. I’ve also have run into Jim Morley a few times and I thanked him and he put it all out there in what the City was trying to do. This is a story the taxpayers and the City Council need to hear about, and again thanks Mr. Rosenberg and Mr. Morley.
It is a story of good people who apply themselves to oversight of the people’s interest for long periods of time. Mr. Rosenberg was open, accountable and honest in his concern about how the Fire Plan B was being taken by City leaders in a non-transparent manner. He stood up for us after 23 years of service but not needed because he was no longer a ‘yes man.’
When will the elected leader fill all vacancies open to his appointment? Make sure training is available where it will make for better public service? And perform annual evaluation or reviews? That guide action before board terms expire? So members so appointed show up, on time, dressed to do their duty as public servants and get graded by the person who appointed them. No more expired terms. Replace them or re-appoint for a term! Is this brain surgery? NO. Is it a way for lazy, conflicted, inept and ultimately corrupt public service to become the status quo? Time will tell.