Connecticut state government continues to struggle with a payroll quandary.
Overtime spending has continued to rise, hitting a new record in the fiscal year that closed June 30 and frustrating business leaders who see it as an unstable weakness in government finances.
But spending on overall compensation — including base wages and bonuses as well as overtime — has declined over the last decade-and-a-half once adjusted for inflation, as Connecticut has been slow to refill the thousands of public-sector jobs it shed during the 2010s.
According to Comptroller Sean Scanlon’s OpenPayroll website, the state’s total compensation bill was $5.8 billion in 2024. In 2011, it was just shy of $4.4 billion, which, after adjusting for inflation, represented $6.1 billion.
Overtime has become increasingly controversial in recent years. State employee unions argue that agencies are dangerously understaffed and much of that overtime is mandatory, exhausting staff and weakening morale. But business leaders and other critics note that overtime earnings are included in worker pension calculations.
“It’s a double jeopardy — taxpayers pay now and then get hit again when soaring overtime costs drive up overall state employee retirement liabilities,” Connecticut Business and Industry Association President Chris DiPentima wrote in a recent post on the association’s website.
DiPentima was referring to a report from the legislature’s nonpartisan Office of Fiscal Analysis that found state government spent $316.3 million in overtime in the 2024-25 fiscal year, up $15 million or 5% from the prior 12 months.
The CBIA noted that’s also up $11 million from the record-high $305.4 million in overtime spending set just two years ago.
Business leaders have long cautioned against the huge pension debt Connecticut amassed over more than seven decades prior to 2011 by not saving properly for benefits pledged to state workers and to municipal teachers.
Connecticut entered last fiscal year with $35 billion in unfunded pension obligations. Coupled with another $44 billion the state either owes to its retiree health care program or carries in bonded debt, the $79 billion total makes Connecticut one of the most indebted states, per capita, in the nation.
When pension debt is high, the state must devote more of its annual budget to cover that expense. The minimum annual contributions Connecticut must make to its pensions already top $3.4 billion, more than 14% of the General Fund.
“We’ve got an affordability crisis in Connecticut — particularly with energy, housing, and child care — and that’s not going to get resolved if policymakers don’t curb state spending,” DiPentima said.
Minority Republican legislators introduced a bill spring to remove overtime earnings from pension calculations, but it was killed by the Democratic-controlled Labor and Public Employees Committee.
State officials have been working since 2017 to whittle down pension debt, employing aggressive savings measures that critics say harm core programs like education, health care and municipal aid.
Since 2020, Connecticut has deposited more than $8.5 billion from budget surpluses into its pension funds. And though a final audit of 2024-25 finances won’t be completed until late September, Gov. Ned Lamont’s administration estimates that surplus will be almost $2.6 billion, which is the second-largest in state history. Most of that cushion also is expected to go into the pension funds.
Does CT government face a staffing crisis?
State employee unions, and much of the legislature’s Democratic majority, say pension debt is far from Connecticut’s only concern.
During Gov. Dannel P. Malloy’s tenure, which ran from 2011 through 2018, he and lawmakers used attrition and hiring freezes to mitigate several deficits, ultimately shrinking the Executive Branch workforce by 10%.
Lamont, who took office in 2019, has refilled some of those vacant posts and negotiated pay hikes of about 4.5% per year between 2021 and 2025 to help attract and retain staff.
But unions were pressed to grant wage and benefit concessions in 2011 and 2017, which have made staff retention more challenging.
More than 4,400 veteran state workers retired in the first six months of 2022, leaving before more stringent limits on pension benefits took effect.
That event became known as the “silver tsunami.” The state typically has about 2,000 to 2,500 retirements in a full year.
The 44,542 positions authorized in last fiscal year’s state budget across all agencies is still down 16% from the 51,509 authorized in 2011.
Labor advocates note the bulk of overtime earned in recent years has been in those agencies with the worst staffing problems, particularly within the prison system.
The Department of Correction accounted for $118.8 million or 38% of overtime spending recorded last fiscal year by the state’s chief human resources database, which does not include the University of Connecticut. Correction had paid $107.3 million in overtime in the prior fiscal year.
Bianca Stedman, a correction department nurse and member of SEIU 1199NE, the state’s largest health care workers’ union, said “severe understaffing” is making it increasingly difficult to get inmates care in a timely manner.
“Instead, we are struggling to deal with the ever-growing inmate population as our workforce just continues to shrink,” she said. “We are constantly overworked, overwhelmed and exhausted. Staff at DOC, not just health care, but across the board, are leaving in droves. Retention and recruitment are at all-time lows.”
Most of the remaining overtime from 2024-25 was paid out by four other departments:
- Mental Health and Addiction Services, $62.9 million.
- Emergency Services and Public Protection, $46.3 million.
- Developmental Services, $42.6 million.
- Children and Families, $30.3 million.
Though Connecticut spends more per capita on pension benefits than most other states do, about three-quarters of that involves covering payments past generations of taxpayers failed to make. In other words, most pension spending has little to do with funding the eventual retirement benefits for present-day workers.
In addition, the gradual downsizing of the state’s workforce has greatly controlled overall compensation spending, which involves base salaries and bonuses as well as overtime.
“Something needs to change,” Stedman added. “Unfortunately. the hiring freezes, threats to our pension and constant denial of necessary positions for our facilities … are not the way to address the issue.”
