In late November, the Connecticut Conference of Municipalities (CCM) released information regarding Connecticut’s state and local pension liability costs, referring to them as “astronomical.” Gordon Hamlin, president of Pro Bono Public Pensions, presented to CCM and said the state’s state and local unfunded pensions and other post-employment benefits totaled somewhere around $125 billion as of June 2018. But, how much of an effect does that have on municipalities?
According to Plainville Town Manager Robert Lee, most Connecticut towns are concerned with the state teacher’s retirement system, not the entire state pension plan. Lee described the teacher’s retirement plan put into action many years ago—at that point, the state absorbed the full cost of the teacher’s pensions which gave them control over pension benefits and where the pension money was invested.
“Relatively recently, maybe in the 70s, they began to underfund that pension program,” said Lee. “So now it’s gotten to the point where they’ve got themselves in a pickle because of that.”
Lee said that within the past few years there had been talk of municipalities paying their own teacher’s pensions.
“To date the legislature has backed off of that, they’ve talked about we’ll only consider charging for your teachers that are in place right now,” said Lee, “as opposed to the legacy of those teachers that are retired.”
If that plan were enacted, Plainville would be on the hook for an amount near $300,000, which could possibly be split into two payments to be made over two years. Although it wasn’t included in the state’s two year budget that is currently in place, there has been speculation that the proposal could come back.
“There are people who are saying expect that this is going to be discussed again this year, despite the fact they made a two year decision last year,” said Lee. “The uncertainty is certainly disarming. Not only disarming, but alarming to us as well.”
In Plainville, town employees are on a defined benefit plan, with the exception of the police department who are on a defined contribution plan.
A defined benefit plan, Lee said, is “where we put it [funds] into a pension program where we guarantee you that you’re going to get so much money based upon whatever that criteria is…so we guarantee you what your benefit will be, like social security.”
The town’s DBP is currently funded between 83% and 85%, which the town manager said is on the upper end of the spectrum, as it is reasonable to be funded between 70% and 75%.
Lee stressed that it is still early in the budget process and so it’s difficult to gauge whether there will be an impact on the upcoming budget. Superintendent of Schools Steven LePage had previously said that he hopes to keep the budget increase below 3% (of the overall budget), but Lee said that the increase shouldn’t be much different from previous years.
In order to monitor the state’s actions regarding pensions, and to present a consistent message, Lee said he will continue to work with CCM and the Council of Small Towns.
Residents who are interested in learning more about Plainville’s budget process are invited to attend the joint meeting of the town council and Board of Education to be held on Tuesday, Jan. 7, 2020, at 6 p.m. in the Plainville Public Library conference room at 56 E Main St.
To comment on this story or to contact staff writer Taylor Murchison-Gallagher, email her at TMurchison@PlainvilleObserver.com.