Connecticut carries one of the heftiest pension debts of any state, a burden that limits what it can provide its residents in terms of tax cuts and services like education and health care.<\/p>\n
But according to\u00a0new data<\/a>\u00a0from a nonprofit public policy group, Connecticut slashed that burden dramatically once it began pouring surplus dollars into its pensions for state employees and municipal teachers.<\/p>\n \u201cIf we continue this progress, the state\u2019s pension systems could be fully funded within a generation,\u201d said Chris Collibee, spokesman for Gov. Ned Lamont\u2019s budget office, which has estimated pension debt \u2014 accumulated over seven decades prior to 2011 \u2014 could be eradicated by the mid-2040s. \u201cThis is an astonishing turnaround from where we were just a few years ago.\u201d<\/p>\n Connecticut\u2019s unfunded pension obligations \u2014 what it owes in retirement benefits but hasn\u2019t saved for yet \u2014 stood at $40.6 billion and represented almost 148% of its annual revenue in 2022, excluding what it received in federal grants, according to the recent analysis from the Pew Charitable Trusts. That put Connecticut\u2019s pension burden fourth-highest among all states when compared with its revenues.<\/p>\n But just two years earlier, the state owed almost $43 billion, which represented 186% of its revenues.<\/p>\n Several key changes occurred in that brief time.<\/p>\n General Fund tax receipts grew by nearly 30%, approaching $21.5 billion, according to the\u00a0comptroller\u2019s office<\/a>. In other words, the state\u2019s ability to pay grew rapidly as Connecticut\u2019s climb out of the recession of 2007-09 picked up speed.<\/p>\n At the same time, the state, having used aggressive new budget caps to rebuild its rainy day fund, began pouring those surpluses into the pensions. Those retirement programs, which already were receiving more than $2 billion in regular annual contributions, got another\u00a0$4.1 billion in surplus<\/a>\u00a0between 2020 and 2022.<\/p>\n The Pew analysis, which required available pension debt data from all 50 states, doesn\u2019t look more recently than 2022.<\/p>\n But Connecticut deposited another $4.5 billion in surplus into its pensions in 2023 and 2024, combined. And most of the nearly $2.5 billion surplus from the 2024-25 fiscal year, which wrapped June 30, also is expected to go into the pensions after the comptroller\u2019s office completes its regular audit of outgoing state finances.<\/p>\n Not all the dollars the state pours into its pensions can be used to reduce debt. About one-quarter of the required annual payments is saved to cover the future pensions of present-day state employees and teachers. The state also pays millions of dollars out of the pension funds annually to provide benefits to current retirees.<\/p>\n Lamont\u2019s budget office, nonetheless, estimated last November that Connecticut\u2019s unfunded pension obligations were down to\u00a0$35.1 billion<\/a>\u00a0entering the 2024-25 fiscal year. Another update is expected from the administration in this fall.<\/p>\n The governor, a fiscally moderate Democrat, has been one of the most vocal advocates for Connecticut budget caps and the need to reduce the state\u2019s legacy of pension debt.<\/p>\n A 2015 analysis<\/a>\u00a0by the Center for Retirement Research at Boston College found governors and legislatures that served between 1939 and 2010 left Connecticut billions of dollars in debt by failing to adequately save for these benefits. This deprived the state treasurer of huge assets that otherwise could have been invested and generated billions of dollars in revenue over those seven decades.<\/p>\n And Collibee said that despite the progress made to date reducing that debt, the latest data from Pew \u201cdoes\u00a0highlight the need for a continued commonsense approach to budgeting. With ongoing macroeconomic uncertainty, we must remain vigilant and prepare for a future economic downturn, making strategic investments, securing our social services safety nets and saving for the future.\u201d<\/p>\n But there have been critics, across the political spectrum, of Connecticut\u2019s new approach to savings.<\/p>\n Many of Lamont\u2019s fellow Democrats in the General Assembly\u2019s majority say Connecticut could temper its savings somewhat, still retire pension debt faster than most other states and preserve deteriorating municipal aid, health care, education and other core programs.<\/p>\n