It seems each morning there is a new story about the “10 best” or “10 worst” cities or states on some critical measure. As a business association executive, I have learned to take many of these measures with a grain of salt. But a recent headline caught my attention: the 10 states most likely to declare bankruptcy, based on bonded indebtedness, unfunded pension and other post employment benefit liability and projected budget deficits.
Connecticut was No. 2.
This should get everyone’s attention, particularly lawmakers in Hartford who have to deal with this triple threat over the next few months. Clearly immediate reform is necessary, but in a manner that doesn’t create unwanted side effects.
Let’s start with the fact that the any compensation package should be determined by what it takes to get desired results from employees. If we want a job done well, the employees need to feel they are being adequately compensated for the effort put forward.
We also recognize that state and municipal workers are not responsible for the size of the unfunded liability (though state workers did agree to defer certain annual required contributions in return for no lay-offs, meaning that future state liability was increased).
That being said, studies now show that compensation and benefits in the public sector are now comparable to private sector compensation levels for similar work, and yet public retiree benefits far outstrip anything being offered outside of government. This has become a crucial issue for every state resident.
As we examine areas for potential savings in light of the state’s projected $3.4 billion deficit and the budget struggles faced by cities and towns across Connecticut, we must look at these issues as well as many others.
The Connecticut Regional Institute for the 21st Century (the Institute) has released a new report entitled Pensions and Other Post Employment Benefits: How Does Connecticut Compare? This is a third report in an evolving series entitled “A Framework for Connecticut’s Fiscal Future.”
A few of their recommendations deserve consideration:
Increase the age at which employees are able to retire with full benefits;
Eliminate cost of living adjustments and longevity payments;
Implement managed care and wellness programs to reduce future health care costs;
Change the averaging period on which benefits are calculated from 3 to 5 years, and don’t allow overtime to be included in the calculation.
Savings associated with these options need to be calculated so informed judgments can be made. It also would be a good idea to study what level of pension is fair in retirement, based on the retiree’s current income and other sources of retirement income.
Policymakers in Hartford should make sure these ideas get adequate consideration.
Oz Griebel is CEO of the MetroHartford Alliance. He was a candidate for the Republican gubernatorial nomination in 2010. More information on the Connecticut Regional Institute for the 21st Century and its report is available at www.ctregionalinstitute.org
