NEWS FLASH – Malloy, State Employee Unions DROP KICK $13 billion plus onto the backs of our children

Governor Dannel Malloy, in concert with Connecticut’s State Employee Unions, have joined forces to shift a major portion of Connecticut’s massive unfunded pension liability onto the backs of Connecticut’s children and those yet to come.

Call it an outrageous effort to kick the can so far down the road that no one will be around to remember what today’s elected officials have done to the economic well-being of those who aren’t yet voters and those who haven’t even shown up on this earth.

Worse yet, the action will probably be taken without a vote of the Connecticut General Assembly.

Warning that such a disastrous deal would be forthcoming, Wait, What? published two recent commentary pieces on the topic.

Don’t shift Connecticut’s unfunded liability problem onto our children.   (Via CT Mirror 12-8-16)


Warning – Malloy likely to propose shifting State’s massive unfunded liability problem onto our children  (12-1-16)

But the warnings fell on deaf ears as Connecticut’s governor now seeks to duck significant responsibility for paying down Connecticut’s unfunded state employee pension fund.

As CT Mirror explains in a breaking story entitle, Malloy, unions strike deal to stretch out spiking CT pension costs;

Gov. Dannel P. Malloy announced a deal Friday with state employee unions that would allow Connecticut to dodge a fiscal iceberg by holding down annual pension costs otherwise set to spike over the next 16 years.

But to get that relief, Connecticut would shift at least $13.8 billion in estimated pension expenses owed before 2032 onto a future generation.


For now, though, the agreement shifts a heavy burden to a future generation on the argument that this one simply cannot afford to pay the full burden it faces.

The CT Mirror adds;

Under the new agreement, this year’s $1.6 billion annual cost essentially would remain flat next fiscal year. It originally was supposed to increase by about $84 million. But after that it would rise steadily until it reaches $2.2 billion in 2022.

It could remain there — depending on how pension investments fare — until 2032.

It would drop below $1.8 billion in 2033 and, from there, it would remain close to $1.7 billion through at least 2046.


The Malloy administration did not release an estimate Thursday of that lost investment opportunity. But a spokesman said the cost could be calculated in the coming weeks after an actuarial analysis of the new pension funding plan is completed.

This plan could be approved, under current legislative rules, without a vote from lawmakers, provided neither the House nor Senate vote to reject it within 30 days after the 2017 session begins on Jan. 4.

For more on this developing story go to:

  • jschm

    He must be running again. This way he can say he took care of unfunded pensions and also get a lot of the campaign money from the unions- the conflict of interest.

    • perturbed


      Respectfully, I think this is way off target, for numerous reasons:

      ► The union bosses couldn’t care less about this problem. They’re not state employees and they don’t get state pensions. They were also complicit in growing this problem over the past 30 years. Why should they care if the state employee pension fund goes broke?

      ► Okay, maybe they *should* care, because it’s important to their state employee rank-and-file members. But that misses the fact that they’re really only interested in organizing and growing their dues bases. State employees are a finite source of new members, and they’re trapped in their current unions. So the union bosses have neither the interest in working on behalf of their members nor the need to pretend.

      ► Even if the union bosses *wanted* to give the appearance of interest in their members’ long term interests, they needn’t worry about the pension funding levels. State employees — like the general population — are oblivious to the problem, and are uninformed about retirement planning in general. They don’t even know enough to push their union bosses to address the pension funding problem.

      So I very much doubt this will affect union boss or union member support for Malloy in any way.

      That’s truly unfortunate. Malloy has really done state employees and the State of Connecticut as a whole a tremendous service in tenaciously tackling this huge problem. It’s been a thankless job for him, but he deserves a lot of credit for his efforts on this issue. (Full disclosure: I am highly critical of Malloy in most other areas. But on this topic, I find it very difficult to find fault.)


  • perturbed

    WAIT! WHAT — on earth — would you propose to do differently, Jonathan?

    Do you think maintaining the existing conditions, with required payments expected to spike to somewhere between $3B and $6B per year by 2032, is a remotely feasible option? If so, there’s no point in even discussing this any further with you, because you are either not being truthful or you are not equipped to analyze the problem in a serious way.

    If not, and you think the proposed solution is such a “disastrous deal,” then what would you do instead?

    Nowhere in all your frantic rantings on this topic have you offered even a hint of an alternative. To simply take pot shots at a set of legitimate solutions without identifying any alternative is beneath you, and we should expect better of you.

    — perturbed

    • jonpelto

      You raise a fair question and I’ll write a column on what officials should have done – starting with (1) not stealing from the next three fiscal years to try and artificially balance the budget while Malloy is in office, (2) identifying a targeted revenue stream to ensure money is available to pay this debt, (3) deal with the teacher pension problem at the same time, (4) deal with the post retirement heatlhcare problem at the same time and (5) have a real negotiation about the fact that 1/4 of state employees don’t pay anything toward their retirement benefits (Tier II)

      • perturbed

        Thanks for the reply. I look forward to that column, and hope it responds to the fundamental question: *What would you do to address the unfunded liability?*

        Items 1 and 2 above are not relevant to this question. Certainly, we can all agree that spending and revenue are not aligned well. That answers a different budgetary question. But the biggest problem is that, absent a responsible plan to restructure the unfunded liability amortization schedule, the current repayment plan becomes clearly and objectively unfeasible.

        Items 3 and 4 seem to imply that unless you fix everything at once, it’s wrong to fix anything separately. I have no idea why this position seems reasonable to you.

        Item 5 finally relates most directly to the central question — or so one would hope. Unfortunately, it’s also a diversion. You plucked out a red herring here, Jon. It sure does gall the public that Tier II doesn’t contribute anything to the fund, so that’s a big chunk of red meat to throw out to your readers. (As a Tier II employee, I agree it makes no sense, and I would gladly pay. In fact, in a heartbeat I’d gladly pay it all right now in one big lump sum for my whole 30 year career if it meant I could join the ranks of Tier I. 😉 )

        The trouble for your argument is that it would accomplish next to nothing to reduce the humongous unfunded liability Tier I created. And it ignores the fact (yes, fact) that ongoing costs associated with active Tier II, IIa, and III are well below the national average and well within the state’s ability to pay. It’s the unfunded liability generated primarily by Tier I retirees that is the problem.

        See Section D starting on P. 16, and Figure 11 on P. 17.

        Are you actually suggesting that the huge unfunded liability generated over 75 years or so could possibly be paid by one generation of Tier II employees?

        I hope your next column can offer something more realistic than that.

        It would also be helpful if you ratchet down the alarmist, bombastic and sensational tone of the last few entries on this topic. This used to be the place to come for informed, well-reasoned debate, not wildly irresponsible ranting. What happened?

        — perturbed