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Pension Fund Again Dominates Audit

Legislative Council again hears that the Pension Fund is the town's largest problem.

 

Things are improving, but the town's flailing pension fund once again dominated the annual town audit presented to the Legislative Council Tuesday.

Scott Bassett, a CPA and partner with McGladrey and Pullen, LLP, the town's auditors, made the presentation at the start of the council's committee meetings.

The town's fund balance is $558,000, 0.3 percent of its $185 million budget and far below the recommended 5 percent level. But it's the pension fund that is the most worrisome, Bassett said.

"The pension fund continues to be an item of concern," he said. It was recommended that the town allocate a $21 million contribution in this year's budget, but that line item was only funded with $6.5 million.

The town has addressed several concerns brought up in last year's audit, including the $9 million deficit in the medical expense fund, but the pension fund problems persist, he said.

That didn't come as a surprise to the administration, which has targeted the pension fund as its top priority this year, Chief Administrative Officer Curt Balzano Leng said.

"The pension problem is the administration's #1 issue," he said, and work has already begun to address it.

"This year we are going to look at every option available under state law to start to deal with it," he said, "while trying to avoid overtaxing residents.

"Last year, fixing the medical insurance deficit was the #1 issue, and this year it's the pension fund," Leng said. "That was a $9 million deficit that we eliminated in one year and I'm happy they recognized that."

Overall he was pleased with the auditor's report, Leng said.

"There were no surprises," he said. "They told us things that we are already working on, and I'm happy it came back clean with no significant problems that we weren't aware of."

The administration will be working with the Legislative Council's new Pension Committee, as well as former council president Jim Pascarella, who now sits on the Pension Board, Leng said. And one thing they'll consider is Pension Obligation Bonds, he said.

"Bonding is one of several options under consideration," Leng said. They will be flushing out the options during the upcoming budget process, he said, after which Mayor Scott Jackson will make his recommendations as to how it should be handled.

"It's going to be the 900 pound elephant in the room during the budget process," he said. "It's going to be a decision that is going to have to be made -- it can't be kicked down the road."

The goal is to avoid raising taxes to address the shortfall, Leng said. Putting in the recommended $20 million contribution would translate into a four to five mill tax increase, he said, which town officials consider unacceptable.

But it's an option, he conceded.

"I would be lying if I said it's not an option that is on the table," he said. "I certainly hope increasing taxes is not the result of this process -- that's not our goal, and our track record shows that we are not going to pass a four or five mill tax increase on to residents.

"We are looking for creative solutions here," he said, "but there is nothing that is not on the table."

Ellen Nosel December 29, 2011 at 02:40 AM
I can not believe that the town is considering bonding to fix this pension problem. Politicians are all alike....they refuse to make unpopular decisions and instead opt to postpone the problem for the next generation to deal with; when they will be long retired and enjoying the pension that will bankrupt our children to pay for. Cowards! And shame on us for voting for these people. Make the tough decisions and live with the fallout.
Beth December 29, 2011 at 02:59 PM
The monumental fiscal problem that needs to be addressed is the overgenerous benefits that town employees enjoy. Years ago municipal employees received better benefits than offered in the private sector because their salaries were generally lower. That is no longer the case -- salaries are on par (if not better -- where else can a custodian make $70,000?) with the private sector but these untenable benefits continue and are destroying the fiscal stability of municipalities. The unions make it impossible to implement changes so the taxpayers continue to pay for these benefits that they could only dream of in their own jobs. Benefits for town employees should be the same as offered in the private sector I've never had a pension in my life. They should have 401Ks with modest town contributions like the rest of us have. There's no reason why these employees should have these outrageous benefits. We can no longer afford it.
Charles Baltayan December 29, 2011 at 04:18 PM
All the Officials know that there is an option to dissolve the pension fund and convert all employees to 401K's or other retirement plans. No one is even mentioning this option. It is clearly the only 'best' option for both the employee and the taxpayer and the Council, Pension Board and the Mayor need to do what is right.
Tony December 30, 2011 at 04:24 PM
I'm not fond of the bonding of the pension, but from what I heard from a legislator, Hamden is looking at a bunch of different options.
Thomas Alegi December 31, 2011 at 06:18 PM
Young educated men and women are moving out of Connecticut at an alarming rate. Why? Because they don’t want to pick up the tax bill for stupid politicians, so if educated men and women are moving out of Connecticut who’s taking their place?

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