In his budget proposal last week, Gov. Dannel Malloy announced his plan for municipalities to pay one-third of teacher pension funds, sparking criticism from advocates and legislators from both sides of the aisle.
The state currently pays the difference between what teachers receive from pension funds and what teachers pay into them, leading the state to foot at least $1.2 billion per year. But under Malloy’s proposal, municipalities would take on $407 million of those costs. Malloy reasoned that teachers are not state employees, rather municipal ones. As a result, municipalities should instead be responsible for paying the bills as they negotiate salaries and benefits with teachers, said Chris McClure, public information officer for the Office of Policy and Management.
“We don’t have a seat at the bargaining table,” McClure said. “We just pay the bill.”
This proposal would also help decrease the state’s budget deficit by shifting roughly half a billion dollars per year to municipalities, he added.
But Joe DeLong, executive director of the Connecticut Conference of Municipalities, argued that local governments are equally as powerless in renegotiating salaries and benefits with teachers. The pension deals are negotiated by local boards of education, not local elected leaders, he said. Local governments are also completely independent from boards of education, he added.
Still, McClure pointed out other issues with the current teacher pension system that Malloy’s proposal would address. Under the current system, wealthier municipalities consume a higher portion of the state’s payments into the Teachers’ Retirement System. Those localities can afford to pay their teachers more, leading the teachers to have higher pension costs. In Greenwich, for example, the average salary for a public school teacher is approximately $90,000. In New Britain, that figure is around $70,000.
“[Malloy’s plan] would bring some equality, but it will not change the system,” McClure said.
But according to DeLong, the ability of municipalities to raise funds is limited to property taxes. With Connecticut’s higher-than-average tax rates, shifting more costs onto local governments would force them to further increase tax rates. Instead, DeLong suggested diversifying local revenue sources as a possible solution.
State Rep. Patricia Dillon, D-New Haven, agreed with DeLong’s sentiments. New Haven already has a large quantity of tax-exempt property, which limits the city’s ability to raise funds through a property tax. This would make paying into the teachers’ pension fund, an estimated $15 million, particularly difficult for New Haven.
“I don’t see that this is very helpful at all and it may even be punitive,” Dillon said.
Echoing both DeLong and Dillon, Rep. Gail Lavielle GRD ’81, R-Wilton, said Malloy’s plan would not really save money, the cost would just shift to cities. Though Malloy stressed that he would not raise taxes, local towns would be forced to raise property taxes in order to pay the pension fund.
Delong added that it is the state’s constitutional obligation to pay for education, citing the recent CCJEF v. Rell court case, which decided that the state has not adequately funded primary and secondary education. According to DeLong, the state’s funding should also be based on the number of students per school system, not the municipality’s ability to funds its schools, as in the current system.
“Because the state hasn’t done its, job it’s racked up a huge bill and now is trying to pass it off,” DeLong said. “The state needs to take on its responsibility to pay for education. We may not agree with the specific proposal, we do agree that this is an important conversation to have.”
The Connecticut Teachers’ Retirement System was created in 1939.