Taking On the Elephant in the Room

There were more questions than answers Monday night during a meeting between the Legislative Council and the town's financial advisers about the failing pension fund.

And many of those questions were from former police and firefighters, now town retirees drawing on that fund and worried what the future holds for them.

David Lee of Dahab Associates, Barry Bernabe, the town’s financial adviser from Webster Bank, and Thomas Dawidowicz, an actuary with Segal Co., met with the council at Government Center with about 30 residents.

It was the first time the three met -- something that surprised some council members who believe they, along with the council, need to work as a team to resolve the impending crisis.

First the council listened to what the public had to say about the situation.

"The pension fund got messed up for two reasons," said Shepard Avenue resident George Levinson. "One, it was not funded properly, and two, the commitments turned out to be so huge and we can't go back and get the right funding -- the money it would take is astronomical and the taxpayers have been paying all along and it's time for some relief."

"No one wants to see taxes rise," said retired police officer Bob Maturo, "but we are at the point where we are looking at the financial health of the town.

"This thing is not going to go away," he said, "and we have an obligation to pay the bill and one is the pension bill -- the pink elephant has gotten bigger than the room and I'm hoping the town can do this on its own without the state coming in."

The possibility of a state takeover of the town's finances is a real possibility if something isn't done to correct the situation, town officials said, and that wouldn't be pretty.

In Waterbury, a state takeover resulted in a mid-year tax to residents imposed by the state. If that happened in Hamden, property owners could find $1,500 supplemental tax bills in their mailboxes, they said.

"I feel hurt, like I was told, 'tough, Harold,'" said retired firefighter Harold Mangler. "I fulfilled my obligation with everything left in my body and I feel that the town owes me."

"The expectation all of us have is that this body come up with some kind of workable plan to fix this and not kick the can down the road," said retired firefighter Lee Johnson.

"You are in a very challenging position," David Lee of Dahab Associates told the council. With $62.5 million in the pension fund, it's sustainable for only three years without a fix, he said, as it pays out $20 million a year.

Lee said he couldn't explain how the town got to this point because he had only recently been brought on board following the resignation of the town's former advisor.

That didn't sit well with council member Austin Cesare.

"I need to know what we did wrong in the past to make decisions now," he said. "Something fell by the wayside here and I would like answers -- we are in a very dire situation."

But none of the three were able or willing to point the finger at who or what caused the fund to drop to such precipitous levels.

Every two years a recommendation is made to the Retirement Board as to what should be put in the pension fund, Dawidowicz said, and it is up to town officials whether to act on that recommendation or not.

In July 2010 it was recommended that $19 million be put into the fund that year, he said, though it wasn't clear how much was allocated.

"In my 12 years on the council there have been very skimpy amounts funded," council member Betty Wetmore said, adding that the council has never conferred with the Retirement Board on the issue.

The town's options come down to going to a pay-as-you-go plan, in which the $20 million pension payments to retirees would be made from the operating budget, or the issuance of pension obligation bonds to shore up the fund.

But even in $90 million was bonded as suggested, it would only extend the life of the plan by 11 years without other corrective actions, Lee said.

Councilman Mike Colaciacovo said the town also has to negotiate with the unions on benefits in addition to the bonding.

"We have to look at the big picture -- right now we are piece mealing it," he said. "We should form a committee and come to a solution because what we are doing now is prolonging the problem, and if this goes belly up it will be no good for anyone."