Governor Lamont Says Today’s Historic $2.8 Billion Special Pension Payment Is One of the Strongest Fiscal Stability Moves Connecticut Has Made in a Generation
(HARTFORD, CT) – Governor Ned Lamont is applauding the announcement made today by State Comptroller Natalie Braswell that her office is transferring $3.1 billion of Connecticut’s operating surplus into the budget reserve fund (commonly known as the rainy day fund) in a move that triggers a statutory threshold requiring a one-time, special payment of $2.8 billion to be made toward the state’s unfunded pension liabilities.
This payment is the largest in state history and will be made in addition to the state’s regularly required contributions to its pension liabilities.
“Connecticut’s pension liabilities have been decades in the making and are the result of decisions by officials no longer in office who decided that it would be easier to kick the can down the road rather than make the tough choices that the state needed at the time,” Governor Lamont said. “This move today is what Connecticut has needed to do for many years and brings the state on firmer financial ground than we’ve seen in a generation. Since coming into office, I have made it a top priority to address our unfunded obligations and get Connecticut’s fiscal house in order because it is what this state needs in order to grow our economy, add good-paying jobs, and make this a place where families and businesses want to live and thrive. For the sake of our future and the future of our children, our administration will continue implementing policies that put Connecticut on the right path to becoming financially stable for the long-term.”
In accordance with the budget bill that Governor Lamont signed into law earlier this year (Public Act 22-118, Section 229), this payment is anticipated to be made in the following manner:
- A $1.9 billion payment will be made to the State Employees Retirement Fund (SERS); and
- A $900 million payment will be made to the Teachers’ Retirement Fund (TRS).
Additional deposits to the pension funds will be made once the final fiscal year 2022 operating surplus has been certified later this calendar year.
The Office of Policy and Management (OPM) estimates that the payment will save Connecticut taxpayers approximately $6 billion over the next 25 years.
“Governor Lamont is the first governor in the history of Connecticut’s modern pension system to make additional payments to reduce the state’s unfunded pension liabilities,” OPM Secretary Jeffrey Beckham said. “These historic payments are the direct result of a sustainable combination of tax cuts, spending cuts, and investments in our businesses and residents that have helped to grow our economy. With global economic uncertainty ahead, these additional payments, along with our budget reserve fund, will help to fortify our state budget against a future possible economic downturn.”
State statutes require that whenever the budget reserve fund accumulates to more than 15% of the net general fund appropriations for the fiscal year, any excess amounts must be transferred to the state’s pension liabilities. This is only the third time in state history and third year in a row this has happened. In 2021, a payment of $1.623 billion was transferred, and in 2020 a payment of $61.6 million was made.