Photo: File Photo / File Photo
HARTFORD — The state’s record $3 billion emergency reserves will allow for an extra $61.6 million investment in the drastically underfunded pension program for state employees, Gov. Ned Lamont and State Treasurer Shawn Wooden announced Thursday morning.
State law requires the additional funding for pensions, Lamont and Wooden said during a morning news conference on the steps of the State Capitol, hours before the governor’s policy team was scheduled to unveil a multibillion-dollar deficit mitigation plan for the $21 billion state budget that runs through next June 30.
“This is a significant milestone for the state,” Wooden said. “Due to smart policy and fiscal discipline in recent years, Connecticut has built our rainy day fund to a historic high at just over $3 billion. This is great news and I’m thrilled that it’s possible.”
The dual pension funds for state teachers, which were refinanced in 2019 with lower estimated rates of return, and state employees, are underfunded by more than $75 billion.
Melissa McCaw, secretary of the Office of Policy and Management, told reporters that the Great Recession of 10 years ago forced the state to deplete the budget reserves and even borrow $900 million to meet expenses. “This is the first time in Connecticut’s history that we have ever been able to make a deposit toe pay down unfunded liability above and beyond our normal annual payments.”
Photo: Jessica Hill / Associated Press
Lamont said that the budget reserve has kept the state in decent shape to tackle the fiscal shortcomings of the coronavirus pandemic. “Connecticut continues to have more debt per person than almost any state in the country,” Lamont said, stressing that bond-rating agencies are giving the state higher marks, which will result in lower interest costs for long-term borrowing.
Photo: Steven Senne / Associated Press
Wooden said “tough, smart financial decisions” are sometimes hard to get through the General Assembly. The small, nearly $62 million investment will save the state about $5 million a year in pension expenses over the next 25 years, on top of the annual contributions of about $145 million for teachers and $355 million for state employees.
“We have to recognize that the steps that we are taking are changing the fiscal trajectory of our state,” Wooden said. “This may seem small here, but for the work I do every day in dealing with investors ans rating agencies, this is significant. They are noticing.”
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