Apr 24
jonpeltoBoard of Regents, Higher Education, Malloy, State Legislature Board of Regents, Higher Education, Malloy, State Legislature
AKA: The ongoing saga known as the Connecticut Board of Regents
Earlier this month, at the request of Governor Malloy’s Chief of Staff, the Chairman of the Board of Regents informed that Board that it would be sending the Governor the names of the three finalists. In that way, the Governor and not the Board would be selecting the next president of the Board of Regents.
Wait, What? readers may recall the two posts entitled “News Flash: What the Hell is going on…Malloy snubs nose at Connecticut law” and “Whoa there…Let’s try telling the truth…”
As the CTMirror reported at the time, the Chairman of the Board of Regent explained that the Board forwarded three names for Governor Malloy to pick from following “a request from the governor’s chief of staff to do so.” The news story quoted Board of Regents Chairman Lewis Robinson as saying, “Which ever one he chooses, we have a fine leader…I think all three are outstanding. I am excited.”
All this despite the fact that the letter and spirit of the law was stunningly clear. The Board of Regents was to conduct interviews, select a candidate and the Governor would technically make the appointment. In that way, the selection process would be done at arm’s-length from the politics of the Capitol.
But alas, despite that clear intent of the law, Governor Malloy and his staff couldn’t help themselves. They wanted to determine which of the three finalists were most likely to recognize their supreme authority.
In response to all of this, the Connecticut General Assembly acted with amazing courage and speed and actually fast-tracked legislation “clarifying” the law by taking away Governor Malloy’s authority to even make the appointment. The new bill put the duty to appoint in the hands of the Board of Regents, tracking the approach that exists with the University of Connecticut’s Board of Trustees.
When the dust settled, there was no bill signing on this one. No smiling faces crowded around the Governor waiting for their copy of the pen that signed the legislation into law.
Instead, as the Hartford Courant noted in their story, “According to a statement from the governor’s office, Malloy ‘signed legislation he proposed in collaboration with state lawmakers’ and said ‘the change will help the next leader institute a long-term vision that increases stability and academic growth for the students at the state’s colleges and universities.’”
Malloy’s statement went on to read, “’I want to thank the members of the House and the Senate, including the chairs of the Higher Education Committee, for working with my administration on introducing this bill and acting quickly on its passage,’ Malloy said, according to the statement.”
So there you go — it turns out that it was all one big misunderstanding and Governor Malloy was actually the one who wanted the new law that made it clear that it was the Board’s responsibility and not his to make the appointment of the next president of the CSU and Community Colleges system.
Thank goodness that was clarified before the governor was forced to personally choose the next president.
You can read more about this story in the follow CTMirror article: http://ctmirror.org/story/19758/after-controversies-general-assembly-votes-remove-governors-authority-naming-college-pre
Mar 20
jonpeltoCharter Schools, Ethics, Family Urban Schools of Excellence (FUSE), Jumoke Academy, Malloy, Michael Sharpe, State Legislature, Stefan Pryor Conflict of Interest, Fuse, Jumoke A, Malloy, Stefan Pryor
As the Connecticut Legislature prepares to take up the nomination of Andrea Comer to the State Board of Education, the Stamford Advocate has joined the chorus warning that it would be a conflict of interest for her to serve on the Board.
About the controversy surrounding Comer, who serves as the Chief Operating Officer of the Jumoke Academy and FUSE charter school management company, the Stamford Advocate wrote, “Gov. Dannel P. Malloy has appointed Comer to the board — raising eyebrows and questions about a conflict of interest. The board has direct oversight of the charter school industry, decides whether to reauthorize charters and votes on funding and the creation of new charter schools.”
“Parents of public school children in the state must be aware: As charter school advocates and professionals solidify their hold on the state’s education policy apparatus, the drive to transfer public funds from traditional public schools to charter schools will grow,” the Stamford Advocate added.
As Advocate concluded, “The overwhelming drive of the state education commissioner and the state Board of Education should be toward improving traditional public schools, which are responsible for educating the vast, vast majority of children in the state. Their focus should not be on expanding charter schools, which serve a tiny percentage. If charters want to expand, fine. They should do so without draining resources for most kids.”
Now it is up to the members of the Connecticut General Assembly to stand up and be counted on this vital issue. As a corporate officer in a charter school company, Comer has a significant and clear conflict of interest. Legislature has a duty to reject her appointment to the State Board of Education.
For the full Stamford Advocate editorial go to: http://www.stamfordadvocate.com/news/article/Conflict-on-state-school-board-4364469.php#ixzz2O2DeWJlm
Jan 23
jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Malloy, State Budget, State Deficit, State Legislature Ben Barnes, Budget cuts, Malloy, State Budget, State Deficit
A state budget deficit at $64.4 million.
SURPRISE! Surprise????
The Malloy administration goes for broke with its misleading approach to the state’s budget deficit problems.
Yesterday, Secretary of the Office of Policy and Management Ben Barnes issued his monthly budget letter to the State Comptroller announcing that due to a decline in revenue (and some additional excess spending); this year’s Connecticut’s state budget deficit now stands at $64.4 million.
The Malloy administration, along with some in the media, act as if this news comes as a surprise.
There is one thing we can say for sure, the fact that the state of Connecticut is facing more than a $50 million deficit should come as absolutely no surprise to anyone.
On December 3, 2012, State Comptroller Kevin Lembo officially certified that Connecticut had a $415 million state budget deficit.
The next day the headline in the CTNewsjunkie read, “Malloy Not Convinced Deficit Is Higher.”
The Malloy administration was sticking with their projection that the state had a $365 million budget deficit come Hell or high water.
Immediately after Lembo released his official certification of the $415 million deficit, Roy Occhiogrosso, the governor’s senior adviser shot an email off to reporters that read;
“We disagree with the number the comptroller is using today… The deficit mitigation plan the governor will propose within the next couple of weeks will, based on the best available data at the time, bring the current-year budget into balance.”
Malloy piled on, responding to Lembo’s announcement by telling reports, “These numbers are going to go up and down…We’re moving forward with our package, which addresses a set of numbers…The comptroller thinks we will spend more money than we did — he may be right…I was told similar predictions were made last year and they didn’t turn out to be right, so we’re dealing with the numbers we believe currently represent that challenge.”
The Governor summarized his position by saying, “We’re going to continue going down the path of dealing with it in a forthright, fair, and transparent manner.”
And so the Malloy Administration proceeded in their “forthright, fair, and transparent manner” and took action to eliminate a $365 million deficit.
In his December 10th article, the CT Mirror’s Keith Phaneuf wrote, “State Comptroller Kevin P. Lembo is projecting a $415 million budget hole, while the administration pegs the shortfall at $365 million. Malloy’s proposal, if backed by the legislature in a special session scheduled for Dec. 19, would be enough to close out the smaller figure.”
On December 17, Phaneuf wrote, “The tentative [budget] plan, coupled with emergency spending cuts ordered by Malloy last month, would cover the entire $365 million deficit projected by the administration for the fiscal year that ends next June 30. It would cover all but $50 million of the $415 million shortfall projected Dec. 1 by state Comptroller Kevin P. Lembo.”
And on December 19th, after Malloy’s Deficit Mitigation bill passed the legislature, Phaneuf wrote “It does fall short, though, of covering the larger, $415 million deficit projection issued Dec. 1 by state Comptroller Kevin P. Lembo.”
And on January 2, 2013 Phaneuf and other reporters covered Lembo’s announcement that the state was still facing a deficit of nearly $50 million.
And so here we are… It is two months AFTER Lembo warned the Malloy administration that the deficit was more than $50 million higher than what they were claiming and the Malloy’s budget chief announces that the deficit now stands at $64 million.
Consider it a painful, but enlightening tribute to Governor Malloy’s pledge that he was dealing with the state deficit in a “forthright, fair, and transparent manner.”
Dec 20
jonpeltoBudget Cuts, Democratic Legislators, Malloy, Republicans, State Budget, State Deficit, State Legislature Malloy, State Budget, State Deficit
With little debate, and even less awareness of the ramifications of passing the bill, the State House of Representatives voted 140 to 3 and the State Senate voted 31 to 3 to pass a deficit mitigation bill that included a record breaking set of cuts to social services and education programs.
Considering the bill wasn’t even available to review until just before the vote, legislators would be hard-pressed to claim that they knew the magnitude of the cuts or how those cuts would impact their constituents AND some of the most vulnerable people in our state.
Ending partisan gridlock is a grand thing, and creating bi-partisan cooperation has plenty of benefits, but one would hope that political expediency wouldn’t take the place of good public policy. Looking at the list of cuts, its pretty clear political expediency won out.
In this case, led by a Democratic Governor and a Democratic Legislature, along with the support of nearly every single Republican, Connecticut’s elected officials chose to spare millionaires from having to pay their fair share in income taxes and instead cut just over $250 million in funding for state services, on top of the $120 million Governor Malloy cut last month.
As reported in the CTMirror, “Connecticut’s hospitals took the single-largest hit in the package adopted Wednesday, losing nearly $90 million.” With Malloy’s rescissions last month, Connecticut’s hospitals have now lost a total of $103 million. These were funds that hospitals received to cover the costs of uninsured patients and help to make up for the below-cost reimbursement rates for Medicaid patients.
In the short-term, the funding cuts to hospitals will lead to additional layoffs at many Connecticut hospitals, and in the longer term, the cuts will produce higher health insurance premiums, as costs are shifted even more quickly to those who have health insurance.
The massive cut to the 29 acute-care hospitals did produce some of the no votes.
As CTNewsjunkie reported, “Johnson Memorial Hospital is just emerging from bankruptcy and can’t handle a $608,000 cut, Bacchiochi said. It’s also the largest employer in her mostly rural district and she’s concerned it could be the straw that breaks the camel’s back. Guglielmo [the State Senator from Stafford] cited Johnson Memorial Hospital as one of the reasons he voted against the bill.”
In addition to hospitals, significant cuts were made to a wide variety of community-based health, mental health and social service programs including autism services, mental health housing programs, re-entry programs for ex-offenders, after school programs and many of the state’s arts and culture grants.
In addition to the actual cuts, by reducing state funding for Medicaid programs, Connecticut lose about $60 million in funding from the Federal government, since Washington reimburses Connecticut 50 cents for every dollar the state spends on those programs.
Beyond the cuts, the deficit mitigation bill also increased revenue by $30 million by limiting a couple of business tax credit programs, including a relatively minor change to the film tax credit and the expansion of an element of the tax on electricity generation.
The budget mitigation plan also swept up $11 million in one-time funds that had been reserved and devoted to specific targeted programs (such as energy conservation) and shifted the state’s $10 million stem cell research program to the state’s credit card.
Finally, the plan collects and extra $9.5 million, as CTMirror explains, “by intensifying efforts to identify and prevent state income tax fraud.”
There was a fair amount of discussion about eliminating longevity payments for non-union employees. Completely eliminating the longevity payments, those being the twice a year payments that employee with more than ten years of state service receive, would save $6 million a year.
Under the plan that passed last night, the 3,200 non-union state employees will get their longevity payments one last time in April AND those last payments will be added to each employee’s base pay. However, after that, longevity payments for the non-union employees will be eliminated.
A variety of education programs also got cut, “saving” the state budget about $11 million. The UConn Health Center was also cut an additional $4 million. The higher education cuts come on top Malloy’s recent $10 million cut to UConn and $14 million cut to the Connecticut State Universities and Community Colleges. Malloy also made a multi-million dollar cut to student financial aid for lower-income Connecticut students attending public colleges in the state, money students had been promised next month.
Additional coverage of the budget document can be found at CTMirror: http://ctmirror.org/story/18530/state-house-passed-budget-deficit-mitigation-bill-bipartisan-fashion, CTNewsjunkie: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/general_assembly_erases_deficit_with_bipartisan_support/ and the Courant http://www.courant.com/news/connecticut/hc-special-session-20121219,0,3466632.story
Nov 30
jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Kevin Lembo, Malloy, State Budget, State Deficit, State Legislature Ben Barnes, Kevin Lembo, Malloy, State Budget, State Deficit
When Governor Malloy proposed this year’s budget, the General Assembly passed it, and the Governor signed it into law, it was widely understood that the Malloy Administration had purposely underestimated the true costs of funding various programs, especially within the Department of Social Services.
Almost immediately, State Comptroller Kevin Lembo started warning the Malloy Administration that spending on social services would exceed what was authorized in the state budget.
Eventually, Ben Barnes, the Secretary of the Office of Policy and Management, admitted that the state might spend as much as $100 million more than authorized on these programs.
When the truth finally came out last week, the projected spending level is at least $191 million more than budgeted, although the federal government will reimburse the state for 50 percent of that amount.
This week, details about the $191 million in excess Medicaid spending were finally provided. The overspending includes;
$62.5 million in Acute Care Services (hospitalization)
$46.1 million in Professional Medical Care (doctors)
$25.9 million in Other Medical Services (lab work, treatment, medical supplies and equipment)
$13.0 million in Home and Community Based Services
$39.6 million in Nursing Home Facilities
$2.8 million in other Long Term Care
$1.0 million in Administration and Adjustments
In addition to the “optimistic assumptions,” there has been an increase in caseload, although the Malloy Administration’s attempt to blame the problem on increasing caseload is more than a bit disingenuous.
According to estimates from the independent Office of Fiscal Analysis, the number of Low Income Adults seeking services has grown by about 4,000 clients since the beginning of the fiscal year in July, a 5.0% increase. These additional clients represent an additional cost to the state of about $30.0 million.
In addition, the Malloy Administration had proposed a number of initiatives to reduce spending on Medicaid this year, most of which have yet to be implemented.
As part of Governor Malloy’s $132 million in cuts that he proposed yesterday, the Department of Social Services was hit for about $32 million. These cuts will force significant reductions in a variety of vital services starting in December and January.
Some of the more significant program cuts include the following;
Children’s Trust Fund $657,000
Husky B Insurance Program $1.5 million
Old Age Assistance $1.5 million
Aid to the Disabled $964,000
Temporary Assistance to Family (TANF) $5.3 million
Connecticut Home Care Program $2.3 million
Child Care Services (which is the child care subsidy for low-income WORKING PARENTS) $2.3 million *
*So, the cut could actually cost the state money if parents are forced to quit to take care of children
Housing/Homeless Services $2.9 million
Furthermore, the largest cut to the Department of Social Services is being made to the grant program to Connecticut hospitals to help them cover their uncompensated care. Malloy’s cut to these hospitals is for $13.4 million, which will certainly lead to health insurance premiums going up as hospitals try to stay in business by shifting even more costs to self-pay patients and those who are insured.
Nov 30
jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Malloy, Spending Cap, State Budget, State Deficit, State Legislature Ben Barnes, Budget cuts, Malloy, Spending Cap, State Deficit
(Updated with missing sentence and fixed typo – sorry)
The hands down leader for the most absurdly incredible budget comment of the year, at least to date, doesn’t go to Malloy or Occhiogrosso, albeit they have had some pretty good ones, but to Ben Barnes, Malloy’s budget chief.
When Barnes spoke to Connecticut legislators earlier this week about this year’s $365 million budget deficit and next year’s projected $1.1 billion shortfall, legislators also asked him about the impending and monstrous “spending cap” problem that Connecticut is facing.
Barnes said that if Connecticut did not exceed the spending cap, the projected deficits would actually be surpluses.
Although this year’s budget is “projected” to be $5.9 million below the spending cap (3 one hundredth of one percent), next year’s current service budget will be $600 million over the spending cap and the year after that, the budget will exceed the spending cap by $1.2 billion. In FY16, the Connecticut budget, as of now, would be $1.3 billion over the spending cap.
What Barnes was really saying was that IF Connecticut cut funding by well over a billion dollars, our deficits would become surpluses. While reasonable people can disagree about the amount of cuts that can be adopted, there is no rational observer who would suggest that the Connecticut budget can be cut by $1 billion.
To put the issue into perspective, between his budget cuts and the Malloy-SEBAC state employee agreement, the Malloy administration reduced state spending this year by $400 – $600 million, depending on how generous one wants to be with the numbers. The vast majority of those savings came via the state employee concession package.
The ability to now cut an additional $1 billion, with the employee agreement now locked into place, is impossible.
It would have been easier to have won the recent $500 million lotto – and even that amount wouldn’t have solved Connecticut’s problem.
There are those who will say that the Great Recession is over and the economy is getting “better,” but Connecticut’s fiscal crisis is very real and is actually getting worse.
In addition the revenue and expenditures issues, Connecticut’s flawed Spending Cap will finally have to be addressed.
Instead of refusing to step up to the challenge and explain the truth to Connecticut’s legislators, Ben Barnes, Malloy’s Secretary of the Office of Policy and Management, steadfastly remained committed to misleading legislators and the public.
Hartford…We have a major problem here and the Malloy Administration is making it significantly worse by failing to tell the truth.
Nov 25
jonpeltoMalloy, Pelto, School Funding/ECS, State Budget, State Legislature, Wendy Lecker Malloy, school funding
Will Malloy rise to the occasion and make resolving Connecticut’s School Funding Crisis his legacy?
From today’s Hartford Courant Commentary by JONATHAN PELTO AND WENDY LECKER
http://www.courant.com/news/opinion/hc-op-pelto-lecker-connecticut-schools-underfunded-20121123,0,6000165.story
“Courts have been equally clear that when schools are given adequate resources, learning improves.
In New Jersey, Maryland, Colorado, Massachusetts and elsewhere, increased spending on basic educational resources led to demonstrated improved achievement.
Despite vast differences among states, courts enumerated a remarkably consistent list of educational necessities, including: high-quality preschool, small class size, additional services for at-risk students, supports for teachers such as professional development, curriculum supports, supplies, equipment, adequate facilities, and adequate books and other learning tools.
As Stamford’s mayor, Dannel P. Malloy understood the direct link between resources and achievement. He was a founding member of the Connecticut Coalition for Justice in Education Funding, the plaintiff in Connecticut’s pending school funding lawsuit.
By joining the coalition’s lawsuit, then-Mayor Malloy acknowledged that the state cannot meet its duty to provide every child with a quality education without providing every school with the resources to meet each child’s needs.
Sadly, as governor, Malloy has not made resolving the lawsuit and properly funding education a true priority. Instead, his new “solutions” for education are privately run charter schools and teacher evaluations based on test scores.
Yet charter schools, serving 1 percent of Connecticut’s public school students, have dismal graduation rates and routinely exclude Latino students, English language learners and students with disabilities.
Furthermore, teacher evaluations based on standardized test scores have been proven to be wildly inaccurate and to massively increase the frequency of standardized tests children must take.
Instead of diverting funds to reforms that do not work, this governor has the historic opportunity to create a fair and equitable school funding system. Malloy’s legacy will rest on how he deals with the education-funding crisis highlighted in CCM’s report. More important, our children’s futures depend on it.”
To read the full piece go to: http://www.courant.com/news/opinion/hc-op-pelto-lecker-connecticut-schools-underfunded-20121123,0,6000165.story
Nov 21
jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Malloy, State Budget, State Legislature, State Politics, Taxes Ben Barnes, Malloy, State Budget, State Deficit
According to Connecticut law, by the twentieth day of each month, the Governor’s Office of Policy and Management must provide the Office of the State Comptroller with a statement of “revenues and expenditures for the General Fund.”
Using this information, and his own budget experts, the State Comptroller then produces the state’s official financial statement that is released on the first of each month.
A couple of weeks before the election, OPM reported that the projected deficit was $60 million.
A couple of weeks after the election, OPM reported that the projected deficit was $365 million.
As to the question of whether a state deficit could leap from $60 million to $365 million in thirty days, the answer is a simple and resounding – “No.”
So what is going on?
On October 19, 2012, Ben Barnes, Governor Malloy’s budget chief, wrote to State Comptroller Kevin Lembo to report, “We are projecting the General Fund will experience…a $60.1 million shortfall on a budgetary basis, a change of $33.2 million from last month.”
Now, thirty days later, OPM Secretary Barnes, in his monthly letter to State Comptroller Kevin Lembo, is observing that the projected budget deficit is actually six times larger than he had projected, only a month ago.
Now Barnes is reporting that state revenues are down ANOTHER $144.9 million, including $100 million in “unexpected refunds” of income and corporation taxes. OPM lowered the amount the state is expected to collect from the corporation tax by $51.8 million and the amount that will come in from the state sales tax by $43.7 million.
Even more enlightening is that whereas OPM alluded to the fact that it will probably spend $100 million more than expected on health care costs for poor, Medicaid recipients, the letter Barnes sent to Lembo yesterday reports that the Malloy Administration will spend at least $294.1 million MORE than the amount allocated in the state budget that was passed by the Legislature and signed into law by the Governor.
The number is at least $160 million more than OPM projected last month.
Tens of millions of dollars in excess spending is related to costs in non-Medicaid spending, including cost over-runs in the Department of Corrections, the Department of Emergency Services and Public Protection and in other state agencies.
It would appear that some of these higher costs are related to excess personnel costs meaning that Malloy Administration knew for quite some time that payroll costs were going to exceed what had been budgeted for those agencies.
Last week, Governor Malloy and his advisers sought to dismiss any criticism by suggesting that State Representative Larry Cafero, the Republican leader in the House of Representatives, was merely trying to score political points by criticizing the Administration’s handling of the budget.
However, Malloy and some in the media, who simply run with that story, are doing a tremendous disservice to the truth.
While Cafero may very well be attempting to score political points, after all, he is a politician and the political leader of the opposition party; the issues he is raising are legitimate.
In fact, if the tables were turned and it was a Republican Governor announcing massive budget deficits, the Democrats would be calling for legislative hearings and some would even be suggesting that Administration Officials be called to testify, under-oath, so that the Legislature could determine who was involved in the effort to cover-up the magnitude of the budget problems leading up to the election.
The budget analysts who work for the Office of Policy and Management, the State Comptroller and the Office of Fiscal Analysis are some of the most talented people in their field. There is absolutely no question that some of these experts understood the magnitude of the budget problem.
The unanswered question is not whether the professional staff within state government understood that the budget crisis was getting worse, but why those in more political positions chose to withhold the information from the public.
CT Newsjunkie has the latest at: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/barnes_confirms_365m_deficit/ or you can read OPM Secretary Barnes’ letter to State Comptroller Kevin Lembo at http://www.ct.gov/opm/lib/opm/budget/comptrollerletter/fy2013/2012nov20comptrollersletter.pdf
Nov 15
jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Malloy, State Budget, State Legislature, Taxes Budget cuts, Malloy, State Budget, Taxes
Governor Malloy and Connecticut state government will face a projected budget deficit or revenue shortfall of $1.1 billion next year.
Later today, Malloy’s budget office and the General Assembly’s Office of Fiscal Analysis will be submitting their mandated annual fiscal projects about revenue and spending.
The Malloy Administration’s $60 million projected deficit in the days leading up to the election has become a $365 million deficit.
And the projected deficit for next year is now set at $1.1 billion.
As Keith Phaneuf of the CT Mirror writes, “since the governor and legislature must balance the current books and craft a new two-year spending plan this spring, that means they must wipe nearly $2.5 billion in real and projected red ink off the state’s books before the 2013 session ends next June.”
The massive fiscal problem comes after the Governor and Legislature adopted $1.5 billion in new taxes last year, while making significant budget cuts and achieving state employee concessions.
Phaneuf goes on to note, “The administration’s two-year estimate exceeds $1.9 billion in red ink. Just nine months earlier, members of the administration said the state could look forward to surpluses totaling more than $1.1 billion over the same two-year period — a $3 billion shift for the worse.”
Earlier this year, the Malloy Administration projected that the State of Connecticut would have a “$226 million surplus in 2013-14 and a $942 million in the final budget year of Malloy’s term.”
Here are the latest links to news stories about the projected deficit:
CTMirror: http://ctmirror.org/story/18217/ct-projected-deficit/
CTNewsjunkie: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/cts_budget_goes_from_bad_to_worse/
Courant: http://courantblogs.com/capitol-watch/state-looking-at-red-ink-for-next-3-years-cafero-says-its-not-transparent/
Nov 15
jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Malloy, State Budget, State Employees, State Legislature Budget Deficit, Early Retirement Incentive, Malloy
Crew Member: Captain, we’re taking on water. A number of the compartments on the right are filling up and we’re quickly listing to the starboard side.
Captain: Tell the crew to go down and punch holes in the left side of the ship!
Crew member: But Captain, that means we’ll sink for sure.
Captain: True but at least we won’t be listing to the Starboard side when we do.
And thus we have the problem facing Governor Malloy and his Administration when it comes to the value of implementing another early retirement program.
Although Connecticut is only five months into its fiscal year, the state government is facing a $365 million deficit. It is a budget deficit that may very well get worse in the coming months.
Meanwhile, the gap in next year’s budget, the one the Governor must submit a budget proposal for in February, could hit three-quarters of a billion dollars or more. [We now know the FY14 budget shortfall is $1.1 billion].
Faced with a fiscal disaster of this magnitude, there will be some in the Malloy Administration who will suggest that the state offer its employees another incentive to get younger workers to retire.
While it is potentially good news for those who are offered the incentive, it will further reduce the state’s workforce and further cripple the state’s ability to successfully provide services. In addition, of course, it would be fiscally irresponsible.
That said, implementing an early retirement incentive would provide a partial, short-term fix to the state’s budget deficit, and therefore may become part of a deficit mitigation package.
The underlying issue is that early retirement incentives turn active employees into retirees.
As retirees, they are paid out of the state pension fund and not the general fund.
So, for example, a retirement incentive that persuaded 2,000 employees to retire would reduce the state payroll by about $130 million or so. While that development would only “solve” a portion of the deficit problem, it would reduce the demand for General Fund dollars.
Pay checks would become retirement checks, and although smaller, the total amount would still be significant. Meanwhile, the cost would shift to the Pension Fund, which is already one of the most underfunded pension funds in the country. The Connecticut State Employee Pension Fund needs about $11 billion just to bring it up to the appropriate funding ratio.
The short-term benefit of getting 2,000 employees off the state payroll is certainly alluring, but the longer term cost to the taxpayers is significant.
And that doesn’t even count that fact that if these employees are shifted to the pension fund, the state would lose the revenue those employees would have been paying toward the retiree health care fund, if they had remained as active state employees in the coming years.
As many people recognize, the “savings” would also be off-set by more overtime on the part of the remaining employees and the costs associated with filling those positions that cannot go unfilled.
The bottom line is that an early retirement incentive is bad news…
But that said; look for the Malloy Administration to surface an early retirement incentive plan in the near future.
Note: The proposal may come separately or in conjunction with a settlement related to the Malloy Administration’s inappropriate decision to offer a select group of employees an earlier early retirement incentive last year. Their move was probably illegal, and if the problem is not resolved through negotiations, an arbitrator might very well rule that the state must provide a group of active employees with an opportunity to retire early. A broader early retirement agreement could be designed to resolve that problem as well.
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