You have requested our opinion on whether Conn. Gen. Stat.  7-374b(b) and 7-403a authorize municipalities to issue general obligation bonds to fund their unfunded actuarial accrued pension liabilities. We understand that this request for opinion is prompted by the proposed issuance of general obligation bonds by the Town of Stratford for the foregoing purpose, and that the Town's bond counsel, Squire Sanders & Dempsey, has opined that the issuance is authorized under state law. It is our opinion that the cited statutes provide authority for the issuance of such bonds, which are commonly referred to as pension obligation bonds.

Section 7-374b(b) provides that a municipality may issue "bonds, notes or other obligations in accordance with the provisions of this chapter for the purpose of funding a loss and retiree benefits reserve fund established pursuant to  7-403a." Section 7-403a concerns establishment and operation of the reserve fund and the purposes for which it can be used. Subsection (e) of 7-403a provides in pertinent part:

(e) Upon the recommendation of the chief executive officer and the budget-making authority and approval by the legislative body, any part or the whole of such fund may be used and appropriated to pay only for property or casualty losses and employee retirement benefits, and expenses related thereto, including court costs and attorneys' fees, incurred by the municipality. ... For the purposes of this section, "property or casualty losses and employee retirement benefits" shall include, but not be limited to, (1) motor vehicle liability, physical damage and collision, (2) loss or damage to, or legal liability for, real or personal property, (3) legal liability for personal injuries or deaths, including but not limited to, workers' compensation and heart and hypertension, and (4) retiree health and life benefits. (Emphasis added.)

On their face,  7-374b(b) and  7-403 do not expressly provide authority for the issuance of pension obligation bonds. Accordingly, we must seek to ascertain the legislature's intent in enacting these provisions, looking at the legislative history and circumstances surrounding their enactment. Beloff v. Progressive Casualty Insurance Co., 203 Conn. 45, 54-55, 523 A.2d 477 (1987). As originally enacted, neither  7-374b nor  7-403a referred to "employee retirement benefits" or "retiree benefits." They were part of a larger bill, P.A. 86-350, which dealt with a number of issues critical to municipal finance. With respect to municipal bonds, P.A. 86-350 was intended to modernize state statutes, for example, to allow for the issuance of term bonds for the first time and to deal with recent federal tax code changes affecting the tax exempt status of municipal bonds. See 29 Conn. Sen. Proc., pt. 8, 1986 Sess. 2788-89 (April 30, 1986) (Remarks of Sen. McLaughlin). In addition, P.A. 86-350 expanded the purposes for which bonds could be issued by authorizing municipalities to issue bonds to fund judgments and to create a loss reserve fund.1 The bill was intended to permit municipalities "to take advantage of all possible mechanisms to have access to the capital markets" and to provide "as broad an access to the capital markets as could be imagined within the intent of [federal law]." Id. p. 2788, 2791 (Remarks of Sen. McLaughlin).

Sections 7-374b and 7-403a were amended by P.A. 92-172 to expand the purpose for which a reserve fund could be created, and for which bonds could be issued, to include employee retirement benefits. "[E]mployee retirement benefits" is defined to "include but not be limited to ... (4) retiree health and life benefits." Section 403(e). Unfortunately, the legislative history of P.A. 92-172 sheds no light on whether the legislature intended the coverage of the amendment to extend to pension benefits. Although it is a close question, we believe the phrase "employee retirement benefits" is broad enough to extend to pension benefits. We must construe the words of an ambiguous statute according to their plain and ordinary meaning. Caldor v. Heffernan, 183 Conn. 566, 570-71, 440 A.2d 767 (1981); Conn. Gen. Stat.  1-1. The word "include," even without the additional words "but not limited to," is most commonly understood as a term of statutory enlargement, not limitation. See e.g., Pennsylvania Human Relations Commission v. Alto-Reste Park Cemetary Assoc., 306 A.2d 881, 453 Pa. 124 (1973); Lyman v. Town of Bow Mar, 533 P.2d 1129, 188 Colo. 216 (1975); Bradshaw v. Joseph, 666 A.2d 1175 (Vt. 1995); Fraser v. Robin Dee Day Camp, 210 A.2d 208, 44 N.J. 480 (1965). Thus, the enumeration of "retiree health and life benefits" within the definition of "employee retirement benefits" does not indicate an intent to exclude pension benefits. Rather, it is our view that the phrase "retirement benefits," when construed according to its plain and ordinary meaning, is broad enough to encompass pension benefits. See Simpson v. United States of America, 236 F.Supp. 433 (D. Conn. 1964)(pension is an allowance or stipend ... in consideration of past services or of the surrender of rights or emoluments to one retired from service, citing Kneeland v. Administrator, 138 Conn. 630, 632 (1952)); Robinette v. Robinette, 393 S.E. 2d 629, 10 Va.App. 480 (1990)("A pension is a retirement benefit paid regularly, with the amount of such based generally on length of employment and amount of wages or salary of pensioner. It is deferred compensation for services rendered," citing Black's Law Dictionary 1020 (5th Ed. 1979)); Turnbull v. Turnbull, 493 NYS 2d 717, 29 Misc. 2d 683 (1985)("pension" means "those periodic payments paid by an employer to a retiring employee as part of a benefit plan or program"). We adopt this construction as consistent with the legislature's intent, in enacting the original legislation, to broaden municipalities' access to the capital markets.

In your letter requesting our opinion on this matter, you cited to Special Act 96-6, which specifically authorized the City of New Britain to issue bonds "for the purpose of funding the unfunded liability in its policemen and firemen retirement systems." Based on the foregoing analysis, it is our view that New Britain could have issued such bonds for the stated purpose if issued in conformance with the applicable statutory provisions, and if it could have done so within its statutory debt limit. However, as we have indicated, this is a close question, and New Britain may have wished to proceed cautiously with express legislative authority. Further, New Britain's bond issuance had some features that did not conform with existing statutes and required a special act: exempting the bonds from its debt limit; extending the term of the bonds; and structuring the repayment of principal in a manner not otherwise authorized. Thus, we do not think that passage of Special Act 96-6 is conclusive that municipalities are not authorized under existing law to issue pension obligation bonds. In this regard, the proponent of Special Act 96-6 in the State Senate, Senator Nickerson, appears to agree with our view that the New Britain issuance required a special act due to the unique features of the bonds, not due to the purpose for which they were issued. 39 Conn. Sen. Proc., pt. 11, 1996 Sess. 3738 (May 3, 1996)(Remarks of Sen. Nickerson).

In conclusion, it is our opinion that a municipality, pursuant to the authority granted in  7-374b(b) and 7-403a, may issue general obligation bonds to fund their unfunded pension liability. We express no opinion as to the wisdom of the issuance of such bonds generally, or by any specific municipality, nor as to whether pension obligation bonds should be subject to specific controls or conditions not applicable to other bonds. These are policy matters that cannot be resolved by this office.

Very truly yours,

RICHARD BLUMENTHAL
ATTORNEY GENERAL

Shelagh P. McClure
Assistant Attorney General

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Footnote:

1 The reserve fund concept was in response to the municipal liability insurance crisis of the mid-1980s, during which certain types of municipal liability insurance were either unavailable or prohibitively expensive. By issuing bonds and using the proceeds to create a reserve fund, municipalities were given a vehicle to use for self-insurance of risks previously covered by insurance.

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