CT News Junkie | House Leader Ponders Phasing In Shift In Teacher Pension Costs To Municipalities

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House Leader Ponders Phasing In Shift In Teacher Pension Costs To Municipalities

by | Mar 29, 2017 2:00pm
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Posted to: State Budget, Pensions, East Hartford

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House Speaker Joe Aresimowicz and House Minority Leader Themis Klarides at the public finance panel Wednesday at Rentschler Field

EAST HARTFORD, CT — House Speaker Joe Aresimowicz, D-Berlin, said he hasn’t ruled out Gov. Dannel P. Malloy’s proposal to shift one-third of the teacher pension costs to cities and towns.

During a public finance panel discussion Wednesday organized by State Treasurer Denise Nappier, Aresimowicz said he understands the “logic” behind Malloy’s proposal, which has been widely criticized by municipal officials.

He said municipalities are the ones that hire the teachers and set the salaries which will dictate what the pension is going to be. He said when municipalities set the salaries they assume the state will take care of the pension, but this proposal gives municipalities some ownership of those costs.

However, Aresimowicz suggested that the $400 million would be phased in over a period of five years. It’s unclear exactly what that would mean for the state budget savings or the cities and towns.

“To drop a big price tag on a municipality right off the bat is very difficult,” Aresimowicz said Wednesday at Rentschler Field.

Aresimowicz said he’s going into the budget process without any preconceived notions, but he suggested the phasing in because he believes that could be a possible alternative.

Even though the $400 million amount lowers the $1.7 billion deficit it “really would be devastating,” for municipalities, Aresimowicz said.

House Minority Leader Themis Klarides, R-Derby, said the idea is worthy of a conversation, “but at a time when cities and towns are drowning” on unfunded state mandates “now is not the time to say you’re now going to take $400 million of this debt.”

She said it would guarantee a property tax increase in every town.

“Whether I have less money in my pocket because I’m paying extra property tax or whether I have less money in my pocket because I’m paying extra income tax—I have less money in my pocket,” Klarides said.

Office of Policy and Management Secretary Ben Barnes said he just wants things to match.

“I want there to be a revenue package and a spending package and I want them to be about the same number,” Barnes said.

Barnes said he doesn’t have a problem with a phase in because it “preserves the policy” but he also needs to make sure the budget is balanced.

He said local leaders who set the salary levels for these teachers should also have some responsibility for their pensions.

“A phase in accomplishes that,” Barnes said.

He pointed out that a lot of people have announced their general support for a balanced budget, but have failed to offer specifics about how they would do that.

“I anticipate that will be forthcoming in about three or four weeks,” Aresimowicz said.

He said they are not in meaningful discussions yet about how the budget will play out.

At least one group of municipal officials believes shifting any of the cost of teacher pensions is illegal.

David Grogins, an attorney with Cohen and Wolf, drafted an opinion earlier this month that says the governor “cannot require municipalities to contribute” because state statute defines the allowable sources of funding.

He said the only allowable sources of funding are contributions from teachers, appropriations from the General Assembly, bond proceeds, and earnings from investments.

“It is clear in its mandate that these are the only funding sources,” Grogins has said.

Coventry Town Manager John Elsesser said Coventry will be asked to contribute $1.3 million in 2018. That’s a 1.45 mill increase for Coventry taxpayers.
“That’s 3.1 percent of our total town budget,” Elsesser said.

In the next 14 years that will grow to 5.4 mills or 11.5 percent of the town’s budget, Elsesser said.

“This shift is huge to the property taxpayers in the state of Connecticut,” Elsesser has said.

Aresimowicz said he hasn’t calculated the impact of a phase in and he hasn’t decided how the phase in would be implemented, so he couldn’t say how it would impact future municipal budgets.

What is clear is that the cost of the contributions the state will need to make to the teachers pension fund are only expected to increase over the next 17 years.

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