Connecticut has the 4th highest pension costs for its public school teachers in the U.S., a new report released Monday shows.
The high costs are largely attributed to a failure to save enough to pay for future pension promises, the report from TeacherPensions.org concludes.
The report is a project of Bellwether Education Partners, a nonprofit funded by The Joyce Foundation and the Laura and John Arnold Foundation.
“Like the proverbial Pac-Man, the rapidly rising costs of teacher retirement and insurance benefits are pushing out money that could be spent on salaries,” the report concludes.
In Connecticut, the actual amount the state would need to set aside to provide health and retirement benefits to its teachers was $2,611 per year. The added cost to pay for the past unfunded liabilities, however, is $14,374. Only Alaska, Massachusettes and Illinois had a greater unfunded liability per teacher.
The teachers’ pension fund – which has been one of the state’s fastest growing expenses in recent years – will cost the state $1.012 billion in the fiscal year that begins July 1. That’s a $36.6 million increase over the current fiscal year, or 4 percent.
While Connecticut borrowed $2 billion in 2008 to help shore up the troubled fund and promised investors it would contribute annually the full amount recommended by analysts, the most recent review of the fund showed the fund still had $10.8 billion in unfunded liabilities as of June 30, 2014.
In 2008, the fund had enough assets to cover 71 percent of its obligations, and by 2014, the fund had 59 percent of its obligations covered. Actuaries typically cite 80 percent as a fiscally healthy level, which analysts projected the state should reach by 2027.
The state also helps pay for a health plan to supplement Medicare for retired teachers. While that plan is a pay-as-you-go system – not funded by investments – analysts reported the future amount owed to active and retired teachers declined from $3 billion as of June 30, 2012, to $2.4 billion as of June 30, 2014.
Teachers contribute toward both their pension and retirement health plans.