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Gov. Malloy Asks Towns to Partner in Supporting and Fully Funding the Teachers’ Retirement System

Budget Will Include Proposals to Support Retired Teachers and School Administrators

(HARTFORD, CT) – Governor Dannel P. Malloy today announced that the state budget proposal he will release next week includes a plan to protect the health and viability of the Connecticut State Teachers’ Retirement System – the fund responsible for maintaining retirement benefits for over 36,000 retired and 50,000 active teachers, school administrators, and their beneficiaries. The Governor is proposing several modifications in order to ensure that the state, along with the towns and cities for which they were employed, are able to keep the promises made to teachers who have worked in the public school system without affecting their bottom line.

“When we talk about education funding, we typically think of funding our students and schools so that we can deliver on the promise of equitable access to a high quality education,” Governor Malloy said. “But often, the cost of teacher pensions is left out of the education funding conversation. At a time when state government is making difficult cuts to services, we can no longer afford to exclude how we pay for teacher pensions from the conversations. This is not a change to the benefits – we must keep our promises to those who have dedicated their lives to educating our children. Rather, we need to change how we pay these benefits in order to create a sustainable, healthy system that keeps our promises to the state's teachers.”

The proposal includes three key components.

First, the Governor’s budget recognizes that despite the fact that the state is not responsible for the employment decisions of public school teachers made by municipalities, it has been responsible for 100 percent of the employer share of pension contributions into the retirement system. This year, the state is expected to pay $1.2 billion toward teachers’ pensions – representing over one third of the state’s total educational aid and close to one quarter of total municipal aid. The Governor is proposing that municipalities share in the responsibility for funding the retirement system by covering one-third of the employer share of the actuarial cost of the pension system, ensuring that municipalities remain a true partner with the state. This proposal does not change or reduce teachers’ pensions.

Second, the Governor is proposing to preserve the state income tax exemption for the pensions of teachers who continue to live in the state, which he enacted into law in 2014. Beginning in 2017 and annually thereafter, this exemption is scheduled to be 50 percent. The Governor’s budget preserves the exemption.

Finally, the Governor’s budget proposal will include a $10 million increase of the state's contribution to the Retired Teachers’ Healthcare Fund in Fiscal Year 2018 and then an additional $3.7 million increase in Fiscal Year 2019. Additionally, the state’s contribution to the fund will be raised to 25 percent of total healthcare costs from its current funding level of approximately 18 percent. This proposal ensures the state will be better positioned to meet its obligations and immediately increases the contribution to the fund, protecting its solvency.

**For a fact sheet on the Governor's proposal on the Teachers' Retirement System, click here**

Governor Malloy will present his full state budget proposal on February 8 during an address to a joint convention of the Connecticut General Assembly. Throughout this week, he has announced several aspects of what the budget proposal will encompass, including:

**Download: Fact sheet on Governor Malloy’s Teachers’ Retirement System proposal
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