June 6, 2007

HOUSE FUNDS TEACHERS’ PENSIONS
Investing now saves taxpayers’ billions

Legislation cosponsored by Rep. Mary Mushinsky to shore up finances in Connecticut’s Teachers’ Retirement Fund (TRF) passed the House of Representatives. The bill promises to save taxpayers billions of dollars in the long term.

The legislation would reduce the growth in the TRF’s unfunded liability – estimated at $6.9 billion – by authorizing State Treasurer Denise Nappier to purchase pension obligation bonds at favorable interest rates, thus allowing the state to substitute higher interest for lower interest debt.

“The idea of saving billions of taxpayer dollars made for a fiscally sound proposal,” said Rep. Mushinsky, a member of the Finance, Revenue and Bonding Committee. “We are fully funding the teachers’ pension fund and saving taxpayer dollars – it is a winning combination for taxpayers and educators.”

With a repayment term spread over 25 years, savings on the lower interest debt could reach $2.8 billion.

As a condition of the bond sale, the legislation also commits to fund teachers’ pensions at 100% of actuarial recommended contributions, something the state failed to do from 1992-2005.