State Comptroller Kevin P. Lembo’s office announced Thursday that a huge, decades-old backlog in finalizing state pensions should finally be alleviated over the next 18 months.
Lembo said the move also would make it easier for state workers to research their future benefits while largely freeing his staff from a process previously done by hand.
“This is a big step forward for the state,” Lembo told The Mirror in an interview Thursday afternoon. “It was really hard to get clear of that manual process, but it was clear that this had to become automated. This just makes sense.”
“We are preparing for a quick resolution,” Lembo’s chief of staff, Martha Carlson, reported Thursday morning to the State Employees Retirement Commission, referring to a backlog of approximately 14,380 unaudited pensions awarded to retired state employees.
The office hopes to launch the new automated system by February or March, Carlson said, adding that it estimates the backlog could be eliminated within 12 months after the launch.
She also cautioned that there always would be complicated pensions that could require extra time. But there should not be any substantial backlog once the current one is resolved, she said.
At present, once a worker leaves state service, an interim pension payment is estimated.
The comptroller’s office that begins an audit process to calculate the pension precisely to reflect salary history, overtime, hazardous duties and other factors.
This process always has been done manually and involves assembling paper, microfiche and electronic records – some of which go back decades – for each retiree.
But things became particularly problematic in the 2000s when legislatures and governors approved three early retirement incentive programs that produced big surges in workers leaving state employment earlier than anticipated.
The state auditors of public accounts – a legislative watchdog agency not affiliated with pension audit staff in the comptroller’s office – began warning frequently during this period that the backlog was getting too large and didn’t reflect sound business practice.
According to past reports from the state auditors, the backlog grew from 1,200 just before 2003 to almost 6,600 by 2008. And it reached 10,600 by mid-2010.
Though Gov. Dannel P. Malloy refused to offer early retirement incentives when he negotiated labor concessions in the summer of 2011 to help close a big budget deficit, he did agree to postpone any new restrictions on retirement benefits until October of that year.
This produced another surge in retirements similar to those during the early retirement incentive programs. Since mid-2010, the backlog has grown by almost 3,800 pension audits.
Lembo said his office has been working since 2012 to research options, plan a new audit system, secure funding and integrate new software with the state’s existing human resources data processing network.
And even though the backlog has meant retirees may wait years for a final resolution of their pensions, Lembo said that – outside of the state auditors’ office – there hadn’t been much pressure from labor or state management to change the system.
That’s because state law requires Connecticut to pay 5 percent interest per year on any lump sum amount deemed owed to the retirees after the audit is completed.
And state officials generally did not complain since the state was able to achieve investment earnings on any withheld pension funds, Lembo said, adding that Connecticut’s annual investment return often topped 5 percent.
“It’s still not a good business practice,” Lembo said, adding that the backlog eventually would grow to unwieldy proportions, and that had to be addressed.
The comptroller added that the new computerized system offers other benefits.
“Our staff won’t be answering calls from employees in another agency asking, if they leave today, what their benefits will be,” he said. “They can just log into the system and look it up for themselves.
“Paper files, microfiche – that’s not how business is done anymore.”