State sticks it to towns with pension payment proposal

The latest education news reminds me of my second year teaching when the citizens of Haddam and Killingworth were engaged in the annual school budget drama. If memory serves — we’re talking a few decades ago, after all — the budget was defeated in a referendum eight times before it finally passed on the ninth try in mid-August.

Several months before that final budget vote, my principal hand-delivered “contract non-renewal letters” to all untenured teachers like me because we would be the first to go should the budget require extensive staff cuts. Thankfully, most teachers in district survived the budget crisis.

Many teachers across Connecticut might not be so lucky this year. West Hartford schools, for example, announced that “230 of 900 total teachers in the district could receive contract non-renewal letters this May” due to the “budget uncertainty” at the state level.

Facing an approximate $1.7 million deficit, Gov. Dannel P. Malloy hopes to recoup losses via drastic cuts to many districts and through a plan by which Connecticut towns would pay one-third of the cost of the Teachers’ Retirement System (TRS).

“Teachers and school administrators are, after all, municipal employees,” Malloy said. “The state does not pay for pensions for other groups, not police, not firefighters, no other group of town employees does the state establish a pension system for.”

The idea has gained traction, as House Speaker Joe Aresimowicz, D-Berlin, said at a public finance panel discussion Wednesday, he “understands the ‘logic’ behind Malloy’s proposal.”

Still, the towns have never been a part of the TRS, originally established in 1939. School districts contribute 23.7 percent of teacher salaries and teachers add 7.3 percent of their own salaries to the fund. In addition, the state has pre-paid the TRS through an actuarial funding program since 1979 legislation established the practice. The towns have never participated, so adding them now is simply another form of “taxation without representation.”

“While Malloy wants to take hundreds of millions from towns, he does not give them any power over the retirement fund in exchange for all that money,” explained Hartford Courant columnist Kevin Rennie. “Towns have no authority to negotiate with their teachers over pension benefits. The state decides the terms of teacher pensions. That would not change. It does not seem fair to tell local taxpayers that they must start paying a lot of money for pensions but give them no power over the terms of those retirement benefits.”

Smaller towns — like the ones that comprise the district in which I teach — would get hit especially hard. Lizz Milardo, first selectwoman in Haddam (population: 8,400), told me the total additional cost to the town for the TRS is $1.1 million, representing a 14 percent increase of the $7.85 million operating budget.

Likewise, Killingworth First Selectwoman Catherine Iino said her town’s contribution would total $757,422, a 1.1 mill increase over the present tax rate of 25.89, or a 4 percent increase. “Combined with the cut in [educational] funding, which is equivalent to another 2.6 mills — we would face a 14 percent increase,” Iino said.

What’s more, “Killingworth (population: 6,500) is one of the hardest hit in terms of the impact on the mill rate,” Iino wrote in an email. “Unfortunately, 2016 was a revaluation year for us, and our grand list fell by about 4.8 percent.”

Milardo and Iino have traveled to Hartford to lobby against Malloy’s proposal, explained Iino, “both by ourselves and through organizations such as the Connecticut Conference of Municipalities, the Connecticut Council of Small Towns, and the Lower Connecticut River Valley Council of Governments. If the cuts and the teachers’ pension levy go through, we will sadly press for substantial cuts in the school budget. The fact is, our town operating budget is about $5.25 million, and it’s a bare-bones budget.”

Added Milardo: “As of now the [Haddam] board of selectmen and finance are looking at including and not including these numbers in our budget. The issue is we have to bring this to town meeting on May 3 and the word is Hartford will not know the budget until the end of June.”

While Democratic and Republican legislators in Hartford have discussed potential legislation to “help cities and towns delay their budget process and avoid possibly overtaxing or undertaxing their residents,” those talks have gone nowhere.

Thus, towns will likely need to prepare two budgets, as Milardo suggests: one that makes substantial cuts in education and another that recognizes the state is paying its required and rightful share of the teachers’ pension fund. If the second scenario prevails, superintendents can tuck their contract nonrenewal letters away — at least for this year.