A year ago this month, a Wait, What? Blog post began with the words:
There are a lot of crazy, irresponsible and down-right mean things in Governor Malloy’s budget proposal, but his plan to totally eliminate Connecticut’s contribution to the retired teachers’ health insurance fund may very well take the cake. (See link)
But election years will have wondrous impacts on politicians.
As Keith Phaneuf reports in yesterday’s CT Mirror, Governor Malloy is now offering, “modest tax breaks for retired CT teachers.”
As Phaneuf explains;
Gov. Dannel P. Malloy proposed a second round of tax cuts Friday, including a new income tax break for retired teachers that could provide a strategic edge in his re-election bid.
The Democratic governor, who has clashed with public school teachers on several issues in recent years, expanded his recent efforts to extend an olive branch.
It took the form Friday of a two-stage break on state income taxes for retired teachers.
Malloy’s proposal specifically would exempt 25 percent of retired teachers’ pensions from state income taxes retroactive to Jan. 1.
That exemption would climb to 50 percent in January 2015. The annual cost to the state of this once it is fully implemented would be $23.7 million per year.
Malloy rejected suggestions this was an election-year overture to a key part of his base, noting that most retired teachers aren’t eligible to receive Social Security benefits. There are about 23,000 retired teachers living in Connecticut.
“All I’m trying to do is equalize that unfair treatment,” he said, calling teachers “vital public servants.”
However, Wait,What? readers know Connecticut will be facing a combined $3.2 billion dollar deficit in the three years following the next election.
The tax cuts Malloy proposed on Friday, “would add more than $50 million to the nearly $1 billion shortfall projected for the first state budget after the election.”
While Malloy claims that his “election-year” offer to retired teachers is not related to the fact that it is an election year, readers may want to go back and re-read the Wait, What? blogs entitled; Define fiscally and morally irresponsible? Malloy’s plan for older, retired teachers and Heck, with an average age of 75, retired teachers may not even remember it was Malloy’s proposal
Here is the first of those posts – this one dated February 21, 2012
There are a lot of crazy, irresponsible and down-right mean things in Governor Malloy’s budget proposal, but his plan to totally eliminate Connecticut’s contribution to the retired teachers’ health insurance fund may very well take the cake.
For nearly sixty years, the State of Connecticut has been helping retired teachers acquire health insurance.
Prior to 1986, active teachers did not pay into the Federal Medicare system, so when they retired, they didn’t qualify for Medicare, the primary health insurance system for older Americans.
Furthermore, since teacher salaries were historically so low prior to the educational enhancement act of 1986, older teachers were retiring with very small pensions. With no Medicare and limited incomes, few could afford the most basic level of health insurance coverage, without some type of subsidy.
For nearly 4 decades, the State of Connecticut utilized a variety of different mechanisms to help these older, retired teachers get some health insurance. In 1991 it settled on the creation of the Retired Teachers Health Insurance Fund.
To fund the program, active teachers contribute 1.2 percent of their income into the health fund. This year that amounts to about $45 million.
The premiums that retired teachers pay for their insurance brings in about $37 million.
And state law required that the State of Connecticut contribute 33 percent of the cost of a Medicare supplement plan into the Insurance Fund.
Together these funds were used to help retired teachers get health insurance through the Teacher’s Retirement Board or through their last employing board of education. The subsidy isn’t much, only $110 per month, and despite the massive increase in health insurance premium costs, the subsidy hasn’t been increased since 2000. The Teachers Retirement Board has determined that the $110 subsidy “now covers “on average” only 14% of the monthly premium for the retiree, further eroding the value of the retiree’s pension.
But as bad as things have become, even the $110 helped a little as these retired teachers were forced to shell out of their own pockets an additional $500 to $900 a month to buy insurance through their former boards of education.
Meanwhile, some towns are engaging in a whole separate effort to change the rules and unfairly force teachers off their municipal plans, but I’ll cover that growing problem under a separate post.
In any case, for good or for bad, the present system has been functioning fairly well.
And then to balance the state budget in Fiscal year 2010 and 2011, Governor Rell and the Democrats decided to insert language that allowed the state to forgo any contribution for two years. The lack of funding created a situation that began to derail the financial stability of the Retired Teachers Health Insurance Fund.
When Governor Malloy was sworn in, rather than recommit the state to the appropriate level of funding, he proposed shifting the burden onto the backs of the retired teachers. The Legislature rightfully rejected the move, but “compromised” by agreeing to only allocate 25% of the value of a Medicare supplement plan rather than the 33% required by the law.
While the state did deposit $35 million in Fiscal Year 2012 and $18 million in Fiscal Year 2013, by refusing to deposit the appropriate amount the Fund was, yet again, undermined.
And then came this year…
Malloy went for broke and proposed simply making no payments what-so-ever into the fund.
This Governor, who ran on a platform of fiscal responsibility, proposing that the state simply forgo putting $70 million into the Retired Teachers Health Insurance Fund.
Here are the facts;
In 2012 the Teacher Retirement Board health plan was serving 18,804 retired teachers
In 2012, the Teacher Retirement Board was also paying the town subsidy on behalf of 16,725 retired teachers.
The average age of the retired teacher on the Teacher Retirement Board’s plan is 75 years old.
These teachers received a $0 cost of living adjustment in their pensions in 2010 and 2011.
The Governor’s plan is simply outrageous.
The Connecticut General Assembly eventually modified Malloy’s plan, but in the end, Connecticut’s retired teachers were still shortchanged and hurt thanks to the Governor who now says, “ All I’m trying to do is equalize that unfair treatment [of these] vital public servants.”
Does Governor Malloy think retired teachers will forget how he targeted them in last year’s budget proposal or does he think they are simply to stupid to catch on to his latest scheme.
For more on the issue, here is this year’s CT Mirror story: http://ctmirror.org/malloy-offers-modest-tax-breaks-for-retired-ct-teachers-consumers/ and here is some information from CT Mirror about Malloy’s plan last year: http://ctmirror.org/malloys-budget-would-deplete-retired-teachers-health-care-fund/