I knocked doors last week, and a constituent asked me why I don’t often post about the pension crisis. It’s a pretty wonky problem that doesn’t fit naturally into a Facebook post, but here’s some insights into how we’re digging CT out of a hole and improving our prospects…
Connecticut has tens of billions of dollars of unfunded pension liability. Paying for those pensions and for the debt we've already accrued takes up a disproportionate amount of our annual budget. That's the bad news. Here's the good news…
First: we've stopped the bleeding. The pensions that state employees enter into nowadays are far less generous than in the past. Modern "Tier 4" pensions involve a 403(b) and regular employee contributions, much closer to a 401(k) that you might see in the private sector.
As a result, all of our new state pensions are fully funded — it's the old ones from the 1970s and 1980s that we're still on the hook for. So what can we do about those? Here's what we've done so far:
1. We expanded successful, cost-saving programs like health incentives for retirees.
2. We refinanced our debt to lower our yearly obligations, protecting our budget and avoiding major burdens to taxpayers.
3. We've added billions of dollars to our state's rainy day fund, which means that if we face an economic downturn in the near future, we'll still have the savings to meet our pension obligations.
We still have years of debt obligation ahead of us, and those of us who work in Hartford will need to make a few more difficult decisions — but we're heading in the right direction. In fact, Standard & Poor recently changed our credit outlook from "stable" to "positive."
Our pension obligations are a challenge, but anyone who tells you that they're a death sentence probably wants your vote more than your trust. With hard work and political courage, we can continue build a future for our state that will make us proud.
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