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News from State Senator Cathy Osten
     

February 8, 2016

Capitol address
Legislative Office Building
Room 2100
Hartford, CT 06106-1591

E-mail me here

On the Web
www.SenatorOsten.cga.ct.gov

Phone
Capitol: 860-240-0579
Toll-free: 1-800-842-1420


Taking Action to Stabilize the State's Pension System

VIDEO: SEBAC
It's no secret that Connecticut has been grappling with how to fund our state pension system in the last few years. The sins of past administrations from the 1930s through the early 2000s--when no contributions were made to the pension fund--have come back to wreak havoc on state finances.

In 2011, the governor and legislature began making the necessary contributions to the fund, rather than kick the can down the road as past administrations have done--but that of course comes with a cost. The state's budget deficit exists largely because we are being responsible and taking action by contributing to the fund annually.

Recently, we took another important step by approving a plan to manage the state's unfunded pension liability over the next 30 years and fully fund Connecticut's pension system.

The agreement with the State Employees Bargaining Agent Coalition (SEBAC) was previously approved by the State Employee Retirement System (SERS), before gaining bipartisan approval of the budget--writing Appropriations Committee at the end of January, before it was approved by the Senate and House of Representatives early this month.

This agreement makes sense, and will provide stability for the State of Connecticut's finances. If we had not voted to approve this agreement, the state would need to make an additional $570 million in cuts to the budget next year above what is already planned, and would face a $6 billion spike in pension payments in the next four years. I am disturbed that Republicans who serve on the Appropriations Committee who voted in favor of this agreement just last month have chosen politics over conscience by voting against it on the floor of the Senate, essentially kicking this down the road. Politics will not provide the solution. The solution will only be found through negotiation, action and having the moral fortitude to do what is right for the taxpayers of Connecticut.

Under the agreement:

  • The assumed rate of return will change from 8 percent to 6.9 percent, putting us under the national average of 7.62 percent.
  • Changing the assumed rate to 6.9 percent significantly increases our calculated unfunded liability and our normal cost calculations, but it better insulates us from volatility in our unfunded liability in the future.
  • In FY 16, paid $300 million for costs associated with current employees and $1.2 billion in costs associated with the unfunded liability.
  • Without the changes in this agreement, payments will skyrocket, potentially hitting $6 billion by 2032.
  • With the changes in this agreement, payments will level off at $2.6 billion in 2021.
  • FY 18 costs for current employees will be $365 million, and costs associated with the unfunded liability will be $1.282 billion.
  • If we change the assumed rate of return without adopting the agreement, contributions to the pension fund will have to increase in FY 18 by $570 million.
     

Good News for Education and the Economy in Southeastern Connecticut

I was extremely happy to welcome the news that the State Bond Commission awarded Three Rivers Community College (TRCC) in Norwich nearly $1 million in funding to improve educational services for students and has allocated $10 million for remediation of the former Norwich Hospital site.

Three Rivers is a critical educational resource in our region and this funding will allow our community college to provide students with additional services to ensure they are successful in obtaining a degree or professional certificate.

I am also thrilled that the commission has shown its confidence in the remediation and renovation of the former Norwich Hospital property. This project is going to be an enormous economic driver in our community for years to come, and redeveloping this long-blighted site is money well spent.

The State Bond Commission voted to approve $920,000 to TRCC for the design and construction of a new Tutoring and Academic Success Center at the Norwich campus. The funding will also be used to make modifications to the college's library and make student services renovations.

Phase 1 of the project consists of the demolition and new construction of partitions, ceilings, interior finishes and fireproofing to the second floor framing between the tutoring center and second floor library. Phase 2 consists of the design of the Student Center and Library renovations project, which will reconfigure approximately 24,700 square feet of space.

Additionally, the commission voted to allocate a $10 million grant-in-aid to the town of Preston, which will fund the completion of environmental remediation of the property and demolition of buildings at the former Norwich Hospital site. The 393-acre property along the Thames River is slated to be redeveloped by the Mohegan Tribal Gaming Authority and converted to a non-casino resort.

These projects will continue the upward momentum that we are seeing in our community, and the state's investment will significantly aid our private-sector partners with these laudable projects.
 

 

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My mailing address is:
Senator Cathy Osten, Legislative Office Building, Room 2100, Hartford, Connecticut 06106
Capitol telephone: 860-240-0579, or Toll-free: 1-800-842-1420

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