Rell official: Tighten retirement benefits

The New England Public Policy Institute published a study commissioned by the Federal Reserve bank of Boston. The publication date was June of 2010. The study concluded that of all the New England states, Connecticut's state employees had the least generous pensions. Connecticut came in dead last. The study only included Tier 2 and Tier 2a state employee pensions Not Tier 1 which is the most generous. Major adjustments were done to the state employee pensions in 1984 and 1997. Somehow state officials never bring that fact up when discussing pensions.

A February 2010 Pew Trust study comparing nationwide state employee pensions showed that most states with funding issues
were just now adopting changes to their pension systems that were adopted by Connecticut in 1984 with the creation of Tier 2 and the creation of Tier 2a in 1997.

The issue at hand with this 19 billion dollar liability is that the state did not and has not been making adequate contributions to it's pension obligations. Employees have been making their contributions. They do not have an option to say, I don't think I want to put in my contribution this paycheck.

The unions also have given the state a free pass at times
to defer contribution obligations.

The most generous of the State's pensions plans is Tier 1.
Of the 19 billion dollar liability Tier 1 is responsible for 15 billion. Most Tier 1 employees are already retired. A few are still active employees.

It is ridiculous to ask Tier 2 and Tier 2a employees to cover a shortfall that they are not causing.

The state has created this emergency. It has the obligation to correct it by funding the plan.

To denigrate future employee pensioners is not the answer.
But unfortunately in this country the solution is to always make the sons pay for the sins of the father.

Dropping or cutting defined benefits are NOT a "solution" for *many* reasons.

First, those that point out the Connecticut's pension benefits are the worst among the Northeast states are correct (overall).

Second, if everything that I've read and heard are correct, the next actuarial report will actually indicate that the pension system's funding *for State employees* (remember that municipal teachers and some other municipal employees also participate in portions of the State's pension system) is actually now quite *good*.

Third, the cost to the State for providing its defined pension benefits is not quite as great as one would think, in part because unlike some other states, when Connecticut's state retirees start collecting their pension benefits they wind up having to RETURN a portion of their monthly checks back to the State via its income tax.

Fourth, MANY Connecticut state retirees *already* have left Connecticut upon retirement, taking their pension payments with them. largely due to personal choice. If Connecticut further erodes its defined pension benefit plans, even *more* retirees will wind up leaving the state (again, taking their pension checks with them) - but then it would be because they feel they HAVE to in order to escape the state's income tax, relatively high property taxes and generally high cost of living - by relocating to states that have no such tax, lower property taxes and lower overall cost of living (remember too that Connecticut is one of the states that not only tax its own state retirees' pension checks, it also taxes retirees' SOCIAL SECURITY checks). Thus Connecticut would lose the income tax that it now gets back from its pension payments, its municipalities would lose their property tax collections from those relocated retirees... and the state would lose the *sales* and related taxes that it collects when its in-state retirees spend their money (which they do) because they will no longer be residing in Connecticut.

Fifth, the State of Connecticut and its Comptroller and Treasury departments have been doing an EXCELLENT job of managing its pension-related investments. Switching to a 401(k)-style plan would result in the loss of that investment oversight, resulting in brokerage houses making a FORTUNE off of state employees AND Connecticut's taxpayers in general (who would have to fund the state's matching contributions) while retirees would have FAR less earnings on their investments (remember - state employees have ALREADY been contributing at LEAST 2% of their salaries into the state's pension system year in and year out - it's the STATE who has *at times* (but not quite as often as we are led to believe, by the way) neglected to contribute its fair share... resulting in, once again a *reduction* in the income tax that it collects on its own retirees' income.

Lastly, any suggestion that the state should deny its retirees medical benefits solely on the basis of whether or not they seek employment elsewhere upon leaving state employment is nothing more than crazy, irrational political nonsense uttered by people who apparently think that the rest of us are total morons who'd actually believe that it would be a real "solution" to ANY problem. In fact, all that any such restriction(s) would accomplish would be to a) discourage older workers from *remaining in* the workforce once they become eligible for vested benefits - a downright DUMB idea given our aging population as it would literally FORCE a shrinking workforce to pay for a growing senior population, and b) encourage state employees to work MORE YEARS for the state - at a MUCH greater cost to Connecticut taxpayers because generally the longer one works for a given entity the more in salary that they command.

So what IS the "solution"?

First, we must recognize that the "problem" is not really quite as great as some would lead us to believe.

Second, Connecticut's overall system of taxation really DOES need to become *somewhat* more progressive than it is right now.

Third, state government has GOT to become more efficient in its operations. NOT by increasing "contracting out" or "privatization" - that just makes an already bad situation *worse* - the I-84 fiasco is just one rather small example! Rather, like some other states have already done, Connecticut has *got* to automate more of its day-to-day operations, largely through a *substantially* increased use of technology, and thus TRULY decrease the total number of people per citizen that it needs to do its work. Period.

Fourth, the State *must* work with its municipalities and ALL other "stake-holders" to reduce its overall cost of living for its citizens. Mass transit, for example, only works in this regard if it is *truly* MASS transit. STATE-wide. The cost of feeding a family will NEVER go down as long as large foreign and multinational corporations are permitted to maintain their virtual STRANGLEHOLD over local grocers through the public's and government's acquiescence. The cost of electricity can come down only if the State *fixes* its "deregulated" power market. The cost of professional services will come down only if those professionals are helped to feel much stronger connections with their lesser-earning neighbors. The cost of heating one's house or apartment in the winter will only come down if the State encourages its homeowners and landlords to better tighten-up and insulate their properties. The state's courts and lawyers have *got* to be FORCED OFF of their economic ADDICTION to the well-entrenched "tort" system wherein everyone in Connecticut is made to feel that the only way they could get "satisfaction" in a problematic situation is by *suing* someone. Etc.

Connecticut's economic and financial difficulties are not simple and thus do not lend themselves to simplistic solutions that politicians, bureaucrats and even some corporate talking heads often prefer to spout because they believe us citizens can't understand anything the least bit complicated. Rather, the state's problems are VERY complex and are the result of decade after decade of ineffectual problem-solving NEGLECT. Given this reality, offering the "solution" of cutting retirees' earned benefits amounts to nothing more than putting a band-aide on a cancerous tumor.