Category: Retired Teachers

Three months ago, in a move to try and “win over” the support of retired teachers, Governor Dannel “Dan” Malloy proposed a targeted tax break designed to benefit those who spent their careers teaching in Connecticut’s public schools.

In February, the vote-seeking governor explained his support for the partial tax break on teacher pensions by saying, “All I’m trying to do is equalize that unfair treatment.” Malloy added, at the time, that teachers were “vital public servants.”

However, it now looks like Malloy is about to back off his proposed tax break for this year.

The news that Malloy is reneging on his promise to give retired teachers a tax break will come as no surprise to Connecticut’s active and retired teachers.

Since taking over in January 2011, Governor Malloy has consistently sought to undermine and denigrate teachers, retired teachers and the teaching profession.

Sadly, retired teachers have been a special target for the Malloy administration antics.

In February 2012 Governor Dannel Malloy proposed reducing Connecticut’s contribution for an individual teacher’s health care premium from one-third to one-quarter of the set amount to help teachers pay for their health insurance. Malloy’s plan would have cost retired teachers more while saving the state $7.5 million a year.

At the time, Malloy’s budget chief said,

“This will encourage them to stick with their local [health] plans…”

Despite the obvious and significant problems facing Connecticut’s health care system for retired teachers, Malloy’s budget chief blithely claimed that the change would not limit retired teachers from getting insurance. (A statement that was far from true).

A year later, in January 2013, Malloy was back to assault retired teachers again.

As the CT Mirror reported at the time,

Gov. Dannel P. Malloy is asking legislators to eliminate the state’s contribution for retired teachers’ health benefits in the upcoming budget, a move that would save the state $70.7 million and help close a yawning deficit.  [Note: The retired teachers’ health care plan helps approximately 35,000 retired teachers and their spouses with a portion of their health care insurance].

“I have to put down a budget… I think we have given the right outline of what the budget should look like,” Malloy said in response to a question about the proposed cut.

But the leader of the Teachers’ Retirement Board, the state agency that manages the health plan, reports this cut would put the plan’s funding at a “dangerous level” in two years.

“The fund is in serious jeopardy… If the cost is just left to teachers, then the plan will collapse,” said Mark Waxenberg, executive director of the Connecticut Education Association, the state’s largest teachers’ union.

Stephen McKeever, vice president of the state’s other teachers’ union, agrees.

“This proposal amounts to a breach of the contract entered into,” said McKeever, of the state chapter of the American Federation of Teachers and who testified before the Appropriations Committee last month. “It’s cruel. Balancing the budget on the backs of retired teachers is just plain wrong.”

The Connecticut General Assembly ended up putting some of the money back into the budget.

But this year, faced with a tough re-election campaign, Malloy changed course completely and proposed an “income tax break for retired teachers.”

As the CT Mirror reported this time,

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.

But here we are 90 days later and Malloy’s budget gimmicks and rosy revenue projections have caught up with him.

With the General Assembly careening toward its final day of the 2014 legislative session on May 7^th, 2014, watch for Malloy to change his proposed tax break for retired teachers.  Instead of having it take place this year, as promised, Malloy is likely to push off the effective date of the change until at least next year.

That way he can go into the fall campaign claiming that he still gave teachers a tax break, but the break won’t take effect until after the election…when the state will be facing a $1.4 billion-dollar deficit.

Retired teachers are some of the smartest members of the Connecticut electorate.  Few will fall for a politician who has set up a fight in which the promised tax break for retired teachers can only be fulfilled if the next governor and legislature are willing to push through a massive tax increase.

The sad truth is that Malloy’s disdain for teachers and teaching appears to have no boundaries.

After undermining, maligning and insulting retired teachers and teachers for the past three years, with nine months to go before the next gubernatorial election, Governor Malloy has had an epiphany and is now offering retired teachers a “tax break.”

Malloy’s proposal plan would reduce the state income tax on teacher’s pension by 25% in Fiscal Year 2015 (the year after the election) and by an additional 25% in Fiscal Year 2016.

While Malloy failed to explain that the state of Connecticut is already facing a $1 billion deficit in each of those two fiscal years he did say that reducing the tax on teacher pensions was “a matter of basic fairness” and he added, “I’ve been wanting to do this for years.”

Governor Malloy wanted to do this for years?

How about some truth:

The unfunded liability of the Teacher Retirement Board Pension Fund has increased to $11.1 billion.  According to the latest Connecticut State Teachers’ Retirement System actuarial report, “The unfunded actuarial accrued liability increased from $9.066 billion to $11.127 billion” over the two year period from 2010 to 2012.

The State of Connecticut’s failure to properly fund the teacher’s retirement fund and the state employee retirement fund has left Connecticut taxpayers with an obligation that require higher than necessary taxes over the next two decades.

In addition to the underfunding of the Teacher’s Retirement Board Pension Fund, the teachers’ retirement health insurance fund is $3 billion short of what is needed.

As many retired teachers know, Connecticut state law requires that every year the state contribute 33 percent of the cost of health care premiums into the teachers’ retirement health insurance fund.

However in 2012, in an incredibly irresponsible fiscal maneuver, Governor Malloy actually proposed dropping the state contribution to NOTHING!

After retired teaches and their advocates spoke up and fought back the legislature increased the contribution rate to 25 percent.  Although the amount we better than what Malloy had initially proposed it still translated to a cut that further undermined the fiscal health of the retired teachers’ health insurance fund.

But what many retired teaches and other missed was that in that same year Governor Malloy managed to push through another proposal.

Malloy’s 2012 state budget also changed the way the state handles the federal subsidy that the Teachers Retirement Board receives for providing prescription drug coverage for Medicare retirees.

Under Malloy’s plan the State of Connecticut started using those federal funds to OFF-SET the required contribution that the state makes to the Teachers Retirement Board health fund.

In other words, as a direct result of Malloy’s plan, the state of Connecticut is now using the federal contribution that the state gets for teachers on Medicare to further REDUCE what the state provides to the retired teachers health fund.

In this way Malloy is undermining the long-term fiscal stability of the Teachers Retirement Board health fund even more.

While the state of Connecticut’s decision to drop the required contribution to the health fund from 33 percent to 25 percent was “only temporary,’ the maneuver on the federal subsidy the TRB receives for providing prescription drug coverage for Medicare retirees was permanent.

It appears that Governor Malloy and his political handlers think retired teachers will overlook his utter failure to provide for Connecticut’s retired teachers and will vote for him because he dangles a tax break in front of their faces now that it is an election year.

For more about these proposals see PA 12-104, § 21 (the language that temporarily overrides the statute to reduce the state’s share to 25% and increase the share paid by the retired teachers’ health insurance premium account to 42% for FY 13)  and PA 12-1, June 12 Special Session (JSS), (the language that permanently defines the federal subsidy TRB receives for providing drug coverage for TRB retirees under Medicare Part D be used to offset the state’s share of the TRB plan premium cost.)

For more about Malloy’s attempt to win over retired teachers read: CT Newsjunkie

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.

Irresponsible

Outrageous

Inappropriate

Incredible

Breathtaking

 

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/