Share state's teacher pension costs? 'No!' say the locals
“There’s got to be a line in the sand — zero!” State Rep. John Frey said, vowing to oppose proposals in Hartford to make towns and cities share the state’s cost for teacher pensions.
“The problem is, that’s just the camel’s nose under the tent,” he said.
“If there’s one dollar for teachers retirement going to the towns, I’m voting ‘no’ on the budget,” Frey said.
“You can speak for me, John,” added State Senator Toni Boucher.
The $4.4 million bill Ridgefield would get next year as part of a 30% pass-along of state teacher pensions costs to towns, proposed in Governor Dannel Malloy’s budget, was the widely denounced as Frey and Boucher — both Republicans, and the town’s two main representatives in Hartford — met with the Board of Selectmen before an audience of about 30 Ridgefielders on Saturday morning, March 4.
Frey said the Democratic governor’s idea of sticking towns and cities with 30% of the state’s annual teachers pension cost — the $30% totals about $408 million a year — was unpopular with legislators of both parties in the capitol.
“Virtually nobody in the building likes this idea,” Frey said. “...Teachers retirement, it’s just not fair to pass it on to the towns.”
But the cost of teachers pensions is just one aspect of the state’s enormous budget problems.
The state’s two-year or “biennial” budget for the 2017-18 and 2018-19 is about $40.6 billion, and there’s about a $3.4 billion budget gap for the two-year cycle that the state is trying to close.
The governor has vowed not to raise state taxes, having ushered in what Frey described as the two largest tax increases in state history — $1.8 billion, followed by $1.6 billion — over the last six years.
Still, the state has a budget gap.
“The hole is so big, $3 billion for the next two years,” Frey said.
Sen. Boucher noted that if the governor may say he’s not going to raise taxes, but if he then passes on tremendous new costs for teacher pension towns — and they have to raise locala taxes — it amounts to the same thing.
Boucher she laid a lot of the state fiscal problem at the feet of the Democratic governor and legislature.
At the end of the recession that began in 2008 market crash, she said, the state
made a bad “philosophical decision” to try to “tax our way out” of the fiscal problems — and the added taxes stunted economic growth.
She pointed to employment since the recession.
“We’ve only recovered 70% of the jobs,” Boucher said. “Massachusetts has recovered 300%.”
Several townspeople in the audience spoke, and most made it clear they didn’t want to pay more taxes to make up for past pension agreements with state unions, and years of bad budgeting decisions in Hartford — especially if the state does nothing to address the union agreements that are burying it in costs.
“We’ve got to stop the spending,” said Geoff Harrington. “...I think we’re riding a train-wreck to the site of the accident.”
“We’re going to have this same meeting six months from now, unless something’s fixed,” said Dick Aarons.
“I’m in 70s. Many of my friends are leaving the state,” he said. “Guys, long term, it’s got to be fixed.”
One local taxpayer asked First Selectman Rudy Marconi how much Ridgefield’s portion of the towns’ proposed 30% share of annual state teacher pension costs would cost.
“$4.4 million is about a 3% increase to the mill rate,” Marconi said.
The executive director of the Council of Small Towns (COST) had suggested that while the 30% charge — giving Ridgefield a bill for $4.4 million — might not pass the legislature, a smaller compromise number might, Marconi said. And then then that smaller number could be slowly bumped up to in successive budgets to cover reach the 30% the state pension cost.
“$4.4 million in one year is a lot,” Marcon said. “It may start at $750,000 — that’s the camel’s nose. Do you think that could happen?”
“I do,” Frey replied.
And, it could get worse. Frey said that when the governor’s budget director Benjamin Barnes spoke to the legislature’s finance committee recently, he was asked if the towns 30% pension share would remain 30% into the future. He wouldn’t make that commitment.
“Ben Barnes was asked: What’s magical about 30%? Nothing — next year it could be 40%, 50%,” Frey said.
In the back and forth discussion there were a lot of complaints about state pensions, and the way they’ve not only been allowed to grow and grow — without the adequate money being set aside to pay for them.
Selectwoman Maureen Kozlark said it was wrong for the governor and legislature to pass pension costs on to town, without addressing the problems.
“You have to fix the problem before you start handing out bills and expecting the town to pay. You have to fix the problem,” Kozlark said. “...If you don’t make the changes, you’re giving the money but it going into a black hole.”
Many state employees’ pensions are based not on just their base salaries, but on the average of their total annual pay the last three years they work — including overtime, and even mileage reimbursements, Frey explained.
Frey said he knew a state employee planning to work seven days a week for the last 14 months before retiring — gruelling, but there’d be a reward.
“He’ll retire at 51. with a pension of $115,000,” Frey said.
Frey said he’s proposed a bill to limit what pension calculations to use only base salaries, excluding overtime and other add-ons.
Towns and cities, including Ridgefield, have moved from “defined benefit” pension and health plans, promising employees a certain income when they retire, to “defined contribution” plans that simply specify how much the employer will put into retirement and health accounts — that employees usually also pay into, Marconi said.
The state should move in that directions, everyone seemed to agree.
“A quarter of state employees don’t pay anything into their pension,” Boucher said.
Negotiations with unions could yield some concessions and reduce the state’s pension and health costs, Boucher said. If employees make reasonable contributions to their pensions, and pay $15 to $30 co-pay for a doctor’s visit, when they go, she figured there could be a significant reduction in state costs.
“I could see a $3 billion savings, I really could,” Boucher said.
While the meeting with Rep. Frey and Sen. Boucher, both Republicans, put a lot of blame of Democratic Governor Dannel Malloy, First Selectman Rudy Marconi — a Democrat — noted that responsibility for the state’s growing pension problems was bi-partisan, as decades of budgeting minimized contributions and pushed off pension costs to future budgets.
“The pensions, it’s been 39 years. Democrat, Republican, Republican, Democrat — 39 years!” Marconi said. “The state teachers pension fund is $10 billion in the hole.”
The problems aren’t that different today — and the difficulties the state faces are both long term, and short term.
“If we raise state employee pension contributions — whatever we raise it — it’s not going to help with next year’s budget,” Frey said.
In addition to passing-along teacher pension costs, the state is likely to cut costs in other ways.
The selectmen and two state representatives agreed that the money the town receives under various state programs could be dramatically reduced — possibly “zeroed out” — as funding is cut for about 14 “wealthy” towns, mostly in Fairfield County, but also including Simsbury and Avon.
Ridgefield’s Educational Cost Sharing grant from the state — which was over $2 million as recently as 2015-16, and is close to $572,000 this year — is projected to be zero in 2017-18.
School Board Chairwoman Fran Walton was at the meeting, worrying that support for special education will also be slashed.
“I urge you to please fight for the children with special needs,” Walton said.
“Special Education parents should be up on arms,” Sen. Boucher agreed. “They’re taking that funding and putting it on a sliding scale — that’s unconscionable!”
Although all towns and cities would share the teacher pension costs under the governor’s proposal, his budget in other areas passes on more money to larger cities and poorer towns — even while the affluent suburbs in Fairfield County get less.
“Cities are coming out ahead. Bridgeport, collectively, ends up over $30-or-$40 million” Marconi said. “Danbury, right next door, gets $12 million more…
“It’s becoming not, politically, Republican versus Democrat, it’s becoming cities versus small towns.”
Marconi wanted to know how the town should plan in its budgeting decisions, given the governor’s’ budget and an unknown response by the legislature.
“Should we budget based on a worse-case scenario, which would be an unfair tax to the people if its doesn’t go through,” Marconi asked.
“Plan for the middle ground, to some extent,” Boucher advised. “I’d use some of my reserves … Look at the middle ground, and replace it if it does come back from the state.”
One idea Marconi floated at the meeting was for the town to send out two tax bills. One tax bill would be for the town’s traditional annual local costs of running the schools and the town departments — police, fire, highway, parks and recreation, town hall offices. And a second bill that would represent the costs like the teachers pension, being sent down from Hartford to local towns and taxpayers.
“Do we do a separate assessment?” Marconi asked. “To let everyone know: The only reason for this is the capitol, and what;’s happening there.”
“I think that’s a great idea,” said Frey.
“It is a good idea,” added Boucher
Marconi asked the state representatives if the state or governor had investigated whether passing on of pension costs to towns was legal.
“His budget director told the finance committee it is legal,” Frey said.
“He need to be replaced,” Marconi replied. “He hasn’t done his homework and proper research.”
Marconi said that at a recent meeting of board of directors of COST, the Council of Small Towns — which represents 139 of the state smaller communities, under 30,000 population — had voted with all 30 members of the Board of Directors opposing the pension funding plans.
“It was unanimous,” Marconi said. “And, boy, were they angry.”