Stemerman, GOP Don’t Grasp Fiscal Problems

One-time Republican candidate for governor David Stemerman did away with “outside the box” thinking and opted instead for “outside the truth” in his recent op-ed. In addition to misconstruing basic facts, he appears not to understand our state budget or the nature of Connecticut’s long-term fiscal challenges.

Mr. Stemerman makes the ridiculous claim that the 2017 State Employees Bargaining Agent Coalition agreement is responsible for the deficit forecasts in the coming biennium. In reality, the agreement cut that biennial deficit forecast by more than $1.8 billion by reducing pension benefits, freezing wages for three years, restructuring retiree benefits and increasing the costs state employees pay for their benefits. These savings are assumed in the bipartisan budget that Democrats as well as Mr. Stemerman’s Republican colleagues approved, and which the nonpartisan Office of Fiscal Analysis then vetted. In total, the agreement is projected to save Connecticut more than $25 billion over 20 years.

When it comes to the temporary no-layoff provision in the last SEBAC agreement, here are the facts. As of Sept. 1, there are 3,646 employees in the executive branch — more than 13 percent of our total workforce — who are not covered by the no-layoff protection, because they are not in unions covered by the agreement or were hired after the agreement was signed. If you add in UConn, the Connecticut State Colleges & Universities and the legislative and judicial branches, there are about 8,000 workers theoretically eligible to be laid off and that number grows daily as employees turn over.

However, I would not recommend that my successor pursue layoffs. Here’s why: Actuaries estimate that about 40 percent of all workers employed on July 1, 2017, would take a normal, non-incentivized, retirement by 2022. Moreover, all the employees hired since July 1, 2017, are eligible for Tier 4 pension benefits that are lower-cost, and also include provisions that employees will have to pay extra should the fund’s market performance fall short. Less cost and less risk to taxpayers makes this agreement the right path forward compared to the nonsense being peddled by Connecticut Republicans.

Stemerman also uses the canard of Connecticut state employees’ compensation being significantly more than private sector counterparts. In truth, Connecticut state employee compensation appears higher only if you count our unfunded liability, which is the money we have to pay to folks who are retired or have been working for the state for 10 years or more. If Mr. Stemerman thinks he can simply get out of this liability, he’s saying we would cut off existing retirees from their pensions. This is not just morally wrong, it’s also been deemed illegal by our courts.

The restructuring of benefits and changes to our pension funding policy under my administration resulted in a more stable and affordable system in the long term. The path we’re on will see these annual costs increase for a few more years, then stabilize and eventually decline. Taken as a whole, the changes have led Pew, a non-partisan think-tank that works with public pension systems around the country, to say that the State Employees’ Retirement System now faces “minimal exposure to solvency risk or fiscal distress under severely adverse economic conditions.” In other words, the problem is not solved, but the solution is in place and working.

There is a simple underlying premise Mr. Stemerman and his fellow Republicans choose to ignore or do not fully understand: If Connecticut got out of the business of offering state employees any sort of retirement plan tomorrow, the state would still have to pay billions of dollars per year to retirees and vested beneficiaries who have a property right to their pensions. These liabilities go back decades, and it will take our state decades more to resolve them. Attempts to take away these already-earned pensions would certainly be struck down by a court, meaning the state would have to pay the benefits, damages and the cost of the lawsuit, just as it is doing in SEBAC v. Rowland, which has cost the state about $100 million.

What is true, but goes unmentioned by Mr. Stemerman, is that our Teachers’ Retirement System is in worse shape than the state employees’ retirement system. Pew says that “TRS’s risk of insolvency is not insignificant.” There are solutions we can implement to strengthen the teachers’ plan, and I urge my successor to continue working toward that end. My efforts to put the teachers’ plan on a similar trajectory as the state employees’ plan were stymied by Republicans who would rather strip teachers of their pensions, short-changing retirees, and rely on magical tax cuts to make everything better.

Mr. Stemerman says that we all must agree on a common set of facts. It doesn’t matter if people agree on the facts. Facts are facts. Math is math. We may never get the Stemermans of the world to agree, when they are simply driven by a desire to balance our budget with gimmicks and phony math, and to take away rights from working people to reduce taxes on the affluent.

Dannel P. Malloy is governor of Connecticut.

What is true, but goes unmentioned by Mr. Stemerman, is that our Teachers’ Retirement System is in worse shape

than the state employees’ retirement system.