New Haven—John DeStefano, Democratic candidate for Governor, today urged the State Legislature to act now on what he called “the ticking fiscal time-bomb of massive unfunded teacher pension liability.” Teachers and the state contribute to fund future retirement benefits. But it is estimated that the state’s failure to make its required payments leaves unfunded liability of around $1.5 billion - and it’s getting worse at a time when the baby-boom generation of teachers will be retiring in record numbers and with bigger pensions based on higher final salaries. This growing unfunded liability, along with other significantly high state indebtedness, is a major reason for uneasiness about the state’s fiscal condition among credit-rating agencies.

 

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Said DeStefano, “A promise is a promise, and that’s what the state teacher retirement fund is supposed to be – especially because teachers are not eligible for federal Social Security. This is a fiscal crisis in the making that is already eroding confidence in the fiscal condition of the state yet Governor Rell proposes to do nothing. What better investment is there of $250 to $350 million from the $577 million and still growing state surplus than to shore-up the fund, improve earnings to the fund, reduce longer-term costs, strengthen the fiscal condition of the state and give more peace of mind to our teachers who have earned it and believed Connecticut would keep its word to them. And since it’s debt reduction rather than spending, it should not be a spending cap issue.”

 

DeStefano also came out for a constitutional amendment that, if on the ballot and passed by the people of the state this November, guarantees actuarial soundness and accountability for teacher retirement funding. Said DeStefano, “Teacher retirement benefits cannot be negotiated at the local or state level. So teachers and retired teachers are at the mercy of every annual state budget to protect their own investment and their future pensions. Well, we can see how that has not worked. A constitutional amendment is the only way to give the same protection to teachers that most other public and private employees have already under contract or federal pension law.”