Perillo, McGorty and Kelly push for pension reform and refinance
State Representatives Jason Perillo (R-113) and Ben McGorty (R-122) opposed Governor Dannel P. Malloy’s pension funding agreement and instead joined with other Republican lawmakers in urging the full legislature to work together to assess alternative methods to address the state’s growing pension system problems.
The Republican legislators also released data obtained from two actuarial analyses that show how additional steps can rein in the state’s unfunded pension liabilities. Both reports show how pairing pension finance changes with modifications to state employee benefits could increase the solvency of the state pension plan.
“When you roll out a package that stretches out a large payment over fifteen years at $11 billion increased cost to the state, it takes real gall to refer to it as ‘reform’,” said Rep. Perillo. “But that’s what majority Democrats have done today in supporting Governor Malloy’s restructuring of state pension payments today. Future generations will be once again be footing a larger bill for inadequate action taken by the legislature today. We have a plan that begins the necessary fundamental reformation of the pension process that simply has to take place before the state can get back on its feet fiscally.”
“Today we didn’t see any bold action or needed reform on state employee pensions,” said Rep. McGorty. “Instead, we saw the continuation of the old ways that have gotten us where we are with huge increased costs passed on to future generations – generations that are actually finding it harder to remain in this state due to decreasing economic opportunities. Unless we make meaningful benefit changes and control costs, we are just handing the problem down to future legislatures again.”
“We have a $4.4 billion pension problem to fix and the Governor’s solution is an $11 billion tax bill for our children. As a parent with children I cannot vote for an agreement that is going to put almost three times the cost of today’s problem on the backs of our kids,” said Sen. Kelly. “Our children continue to leave this state because of decisions like this. I could not, in good conscience vote for this refinance and I am disappointed the Governor and his majority decided to continue the practice of kicking the can down the road.”
The proposed measure narrowly passed the House on a mostly party-line vote of 72-76, and by an 18-17 vote in the State Senate with Lt. Governor Nancy Wyman casting the tie-breaking vote.
Information below includes:
An analysis from actuaries at the Reason Foundation modeling changes to SERS that could be added to the SEBAC agreement funding policy changes including: adopting a defined contribution retirement plan for new hires, increasing employee pension contributions to 4%, and capping cost of living adjustments to 2% - which would save the state approximately $100 million annually.
An analysis from actuaries at the nonprofit Pew Charitable Trusts showing the reduction in unfunded liability that could be achieved with $200 million in state employee pension benefit changes. Pew confirmed that if the $200 million is sent back into the fund it would cut 7 years off the length of the refinancing, thereby saving taxpayers billions in future payments.