Budget workshop focuses on employee pension, debt service

Nancy Cooper led the workshop discussion – Kevin Webb

Nancy Cooper led the workshop discussion – Kevin Webb

Election season is under way and the League of Women Voters of Greenwich is doing its part to equip the town’s voters with the appropriate knowledge before they cast their votes.

In addition to the debate doubleheader hosted last week for the 149th and 150th District candidates, the league hosted a “Budget 101” lecture at town hall to provide insight into the state’s budgeting process.

League member Nancy Cooper, former CFO of CA Technologies and IMS, led the discussion in the Cone Room at Town Hall. During the hourlong presentation and accompanying PowerPoint presentation, Ms. Cooper offered technical insight into the state’s spending habits and past performance.

“Better understanding of Connecticut’s budget could help us to become more ‘enlightened,’” the presentation’s purpose read. “So voters might be able to make more informed decisions, we hope to shed some light on how the state’s budget process works, where our money goes, how we compare to other states, and what are possible areas for further focus.”

Connecticut’s budget for the fiscal year ending in 2014 was $17.2 billion, 47.6% of which is funded by personal income tax. Of that $17.2 billion, nearly 60% will be used for payments to third parties, which include Medicaid, education, and institutions such as libraries and museums, as well as necessary payments for state debt.

“You have a finite amount of revenue, you have you debt of $1.9 billion in fiscal year 2014-15, expected to decline,” Ms. Cooper said. “However, to fund some of the things we see going, there’s an anticipation that our debt service to revenue will climb from about 11% of revenue to about 13% or 14%.”

Ms. Cooper said some of Connecticut’s budgeting issues are related to the state’s being one of the country’s worst performing in multiple fiscal categories. Connecticut is among the bottom five states in terms of financial solvency, based on its revenue per capita, expenses per capita and the subsequent deficit. George Mason University’s Mercatus Center ranked Connecticut’s fiscal condition 49th in the nation based on data for the 2012 fiscal year, with New Jersey coming in last. While per capita revenue is far above the national average, heavy expenditures led to a substantial deficit.

There was a particular focus on debt, pension and retiree health spending, which make up approximately 23% of the state’s yearly expenditures. Of the state’s $17.2-billion budget, nearly 30% goes toward personnel costs, according to the estimates provided at the meeting. Employees receiving pension or retiree health compensation are responsible for $2.2 billion in spending, with an additional $2.8 billion being paid out to active employees. Ms. Cooper also reported that 90% of the state’s approximately 50,000 employees are unionized, giving them greater negotiating power in terms of pension and pay scale.

According to Ms. Cooper’s data, only 55% of the teachers’ pension and just 41% of the State Employee Retirement System pension are funded, a major drop when compared to 2000, when funding sat at 81% and 63% respectively.

“The companies that I’ve associated with in the corporate world, we really got concerned when it got below 80, so this pretty low,” Ms. Cooper said.

While the deficit is somewhat understandable because of the economic downturn and recession experienced nationally in the last decade, there remains a $25-billion value of unfunded pensions that the state is responsible for moving forward.

“You’re talking about 200,000 people who have and are providing services and goods, have this kind of pension plan, which to me is at risk,” Ms. Cooper added.

During the Q&A session after the lecture, many members of the audience took the opportunity to ask direct political questions regarding the budget and this season’s political candidates. Though some questions bordered on statements for or against certain parties, Ms. Cooper did what she could to offer unbiased answers to those that were reasonable.

Members of the audience questioned the role of county government in preventing budget issues, the possibility of renegotiating pensions with state employee unions and the steps individual voters can take to make a difference.

“I think you should ask for long-term debts to be addressed. I mean, I spent my whole life in finance and I had no idea of this problem,” Ms. Cooper said. “One is spread the word, and I think you want to say to our politicians that we care about what we’re gonna do about this, and we want to know what the plan is. We’ve got the perfect time, a lot of people are up for election, what’s the plan?”

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