Gov. Dannel Malloy proposed a new way to fund Connecticut teacher pensions Friday with towns and cities contributing one third of the costs or roughly $407 million.
“At a time when state government is making difficult cuts to services, we can no longer afford to exclude how we pay for teacher pensions from the conversations,” Malloy said in a statement.
The governor’s statement also indicates that the costs will rise in the coming years, moving from $407 million to $420 million the following year.
Joe DeLong, executive director of the Connecticut Conference of Municipalities, said the proposal amounted to a “colossal cost transfer” and is “tantamount to a $1 billion bill to property taxpayers across Connecticut” over the next two years.
If the governor’s teacher pension proposal goes through it could leave many Connecticut cities and towns in a tough financial situation. According to the governor’s figures, towns and cities would have to contribute 10 percent of teacher payroll into the plan.
New Haven would be looking at a contribution of more than $12 million, based on the city’s 2015 budget.
However, cities such as Hartford and New Haven already qualify as distressed municipalities and receive help from state government.
The extra burden placed on distressed municipalities would likely be lessened or eliminated by the state, leaving the bulk of the pension contributions to be paid for by Connecticut towns.
For instance, Hartford’s wealthy neighbor, West Hartford, would be forced to contribute $10 million per year.
Danbury, whose Mayor, Mark Boughton, was the head of the Connecticut Conference of Municipalities, would likely pay more than $7 million toward the teacher pensions.
Suzanne Bates, policy director for the Yankee Institute said such proposals show how “out of control” teacher pension costs have become and emphasized the need for pension reform. “If Governor Malloy is going to ask municipalities to help pay for teacher pensions, then municipal leaders should get a say in how those benefits are set.”
There are currently 86,000 active and retired teachers enrolled in the Connecticut State Teacher’s Retirement System. Teachers pay 6 percent of their salary into the system and the state contributes 30 percent – approximately $1.2 billion per year.
Earlier in the week, Malloy released a list of proposals to reduce state mandates for towns such as raising the prevailing wage threshold and allowing towns to negotiate contributions into the municipal employee retirement system.
The proposal is part of Malloy’s overall budget which he will present to the General Assembly on Feb. 8.
DeLong added that CCM was looking “forward to having conversations with state officials about best pathways for economic and social success for Connecticut.”