The House of Representatives voted Tuesday to approve the state comptroller’s proposal to restructure the failing state retirement system for local government employees in 107 towns and cities in Connecticut.
The plan, negotiated by Comptroller Sean Scanlon and announced last month, promises to save local governments more than $30 million over the next fiscal year. The House sent the bill to the Senate in the early afternoon by a bipartisan majority, 120-24.
During a brief floor debate, Salisbury Democrat Maria Horn, co-chair of Congress’ Finance, Revenue and Bonds Committee, painted a dire picture of the state of Connecticut’s employee retirement plan. ”
“We serve so many people in Connecticut that we face significant challenges,” Horn said. “Funding rates have fallen to 74% and employer costs have increased by more than 600% since 2001 and more than 75% in the last five years.”
The plan is the result of consultations between the Board of Audit, local government officials and trade union leaders representing workers. Scanlon estimates that this could save the town up to $843 million over about 30 years.
Much of the expected savings are related to changes in when the cost of living adjustment is paid and how the adjustment is calculated to reflect the effects of inflation and investment performance.
The proposal would phase out the current 2.5% automatic COLA adjustment and tie future increases more directly to inflation in hopes of saving money in years of low inflation. .
“For me, in general terms, this new system means that it more closely reflects the costs that retirees are really facing in the market,” Horn said.
The plan also includes incentives for retirement-eligible employees to keep working and re-amortize their pension obligations over 17 to 25 years.
“The solution before us is one that brings together many different voters that will help save the system and provide a stable retirement plan for so many people in Connecticut. I expect you to,” she said.
The bill received significant support from Republicans in the Chamber, including Rep. Holly Cheesman of East Lyme, a prominent member of the Finance Committee. Cheeseman said the retirement program known as CMERS needed a course correction.
“Without these kinds of measures, local governments will face enormous costs for these pensions,” she said. “We want to do something about this retirement plan.”
However, the support was not unanimous. Rep. Tim Ackert (Republican, Coventry) cited opposition from the Connecticut chapter of the National Association of Home Redevelopment Officials. Ackert said the association was concerned that the restructured retirement plan would not be as attractive to potential hires as the previous terms.
“They have serious concerns about this bill,” Ackert said. “Many of our employees fall under this retirement program and are off topic.”
Mr Horn said he consulted with officials at the General Accounting Office and said the office had been meeting with the group for “hours”. “Definitely, they were part of the conversation, too.”
The bill has the support of the governor and legislative leaders on both sides, and will now be considered in the Senate. For the bill to take effect, it must be passed by Wednesday midnight, the statutory deadline of Congress.