{"id":337948,"date":"2025-10-28T08:13:14","date_gmt":"2025-10-28T08:13:14","guid":{"rendered":"https:\/\/www.europesays.com\/us\/337948\/"},"modified":"2025-10-28T08:13:14","modified_gmt":"2025-10-28T08:13:14","slug":"state-retirement-system-wins-2-2-million-lawsuit-against-ellington","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/337948\/","title":{"rendered":"State retirement system wins $2.2 million lawsuit against Ellington"},"content":{"rendered":"

The Town of Ellington<\/a> may have to fork over an estimated $2.2 million to Connecticut<\/a>\u2019s Municipal Employee Retirement System (CMERS) following a court decision that said Ellington either has to be all-in or all-out of CMERS and pay for losses to the state-run retirement plan for municipalities.<\/p>\n

Ellington ceased enrolling new employees into MERS in 2012 under a collective bargaining agreement that enrolled new hires into a 401A Money Purchase Plan, but continued to pay the cost for their employees who were still in CMERS.\u00a0<\/p>\n

The State Employee Retirement Commission, which\u00a0initiate<\/a>d the lawsuit\u00a0after multiple warning letters, argued successfully in court that Ellington has to either continue to enroll employees in CMERS with retroactive payments or withdraw from the system completely, which involves paying for all future retirement liabilities.\u00a0<\/p>\n

Although the town argued they were still paying for future liabilities by continuing to pay for the employees already in the system, SERC argued and presented evidence that allowing municipalities to simply opt out causes losses to the retirement system that the municipality must cover under state law.<\/p>\n

Ed Koebel, an actuary who supplied an affidavit on behalf of CMERS, indicated that \u201cCMERS is a cost sharing plan which pools risks of employers to spread risks across participating municipalities, and that allowing municipalities to opt out would result in an increase in the required funding by all participating municipalities and result in future volatility in the fund,\u201d the court decision states.<\/p>\n

Superior Court<\/a> Judge Kaitlin J. Halloran wrote that the evidence showed \u201csignificant financial impacts on the CMERS fund that are occurring as a result of the Town\u2019s actions.\u201d\u00a0<\/p>\n

Halloran ordered Ellington to enroll all employees hired since 2012 and future employees into the CMERS system and \u201cmake the fund whole with a payment that includes the financial impact to the plan as a result of the Town\u2019s actions,\u201d unless the town withdraws completely from the plan, which would also require \u201cpayment of all future retirement allowances and refunds already vested by the retirement of members from the municipality.\u201d<\/p>\n

How much Ellington will have to pay to CMERS will be determined at another hearing, but \u201cmake whole\u201d estimates provided in an exhibit put the total at $2.2 million as of 2024, which would be three percent of the town\u2019s entire budget. At the time of their initial complaint filing in 2023, SERC had estimated nearly $1 million.<\/p>\n

The hefty price may give more weight to a long-standing criticism of CMERS that once a town joins the plan, it\u2019s nearly impossible to get out due to the costs of withdrawal. As of 2023, there were 107 municipalities that have some or all of their employees enrolled in the system, amounting to more than 10,000 active members.<\/p>\n

\u201cI was deeply disappointed in the judge\u2019s summary judgement decision in favor of the State of Connecticut in the CMERS lawsuit,\u201d said Douglas Harding, chairman of Ellington\u2019s Board of Finance, in an emailed statement.\u00a0\u201cI want to make it clear that the Board of Finance has not been asked for any appropriation in regards to this ruling.\u00a0If the Board of Finance is asked for an appropriation, the Board will discuss the options that are available to fund it in an open and transparent manner.\u201d<\/p>\n

State Sen. Saud Anwar, D-South Windsor, and Rep. Jaime Foster, D-East Windsor, both of whom represent Ellington, issued a statement on state letterhead criticizing the current town administration for not settling earlier and letting the liability grow ahead of the upcoming municipal elections.<\/p>\n

\u201cOther towns facing similar situations chose to settle early, recognizing the legal and fiscal risks involved,\u201d they wrote. \u201cEllington\u2019s decision to take a different path \u2014 to delay and litigate rather than resolve \u2014 proved to be a high-risk, no-reward approach that presumably leaves taxpayers footing a much larger bill, according to the expert witness cited.\u201d<\/p>\n

According to emails to Ellington\u2019s state representatives, however, the town had reached out to both Republican and Democrat state senators and representatives for help in 2024, seeking a statutory revision that \u201cwould keep this situation from repeating itself in municipalities around the state.\u201d<\/p>\n

\u201cCould the legislature resolve this dispute by passing legislation directing the Retirement Commission to request a dismissal of this and all similar controversies and then amending the language of the statute to provide for the non-enrollment of future employees in the CMERS?,\u201d wrote Town Administrator Matthew Reed in a November 20, 2024, email. \u201cEllington acted based upon a duly negotiated bargaining unit agreement.\u00a0The Town of Thompson acted based upon an agreement awarded in binding arbitration.\u00a0This action is costing local taxpayers tens of thousands of dollars in attorney and expert witness fees and ought to be disposed of as soon as possible.\u201d <\/p>\n

Historically, CMERS hasn\u2019t had the massive unfunded debt problems of Connecticut\u2019s two largest pension funds \u2013 the State Employees Retirement System and the Teachers Retirement System \u2013 but CMERS did experience a rapid escalation in costs and debt heading into 2023 that had municipalities,\u00a0including <\/a>Ellington, reaching out to Comptroller Sean Scanlon<\/a>, asking him to address the matter.<\/p>\n

At that point, unfunded liabilities for CMERS had grown from $332 million in 2016 to $1.3 billion, with its funding ratio dropping from 91.6 percent to 68.7 percent. The debt and other factors strained municipal budgets as benefit costs were reaching over 20 percent of payroll.<\/p>\n

In 2023, Scanlon\u00a0announced a bipartisan reform deal<\/a>\u00a0for CMERS that would purportedly save municipalities more than $840 million over the next thirty years, which included changing how the annual cost of living adjustment is calculated, re-amortizing the debt and incentivizing employees to stay on the job longer. The savings figure was later\u00a0decreased to $740 million<\/a>.<\/p>\n

Although some of those changes, like the COLA adjustment, wouldn\u2019t be implemented until 2025, the 2024 pension valuation report\u00a0showed improvement for CMERS<\/a>, largely due to the re-amortization of the debt and higher-than-expected investment returns; CMERS\u2019 unfunded liabilities decreased by 100 million and its funding ratio increased to 73.5 percent.<\/p>\n

While Ellington officials also argued that moving new hires to a new retirement plan starting in 2012 was negotiated as part of a collective bargaining agreement \u2013 which typically supersedes a conflicting state statute \u2013 the judge determined the contract was not in conflict with statute because the contract did not address \u201cthe method or manner of covering or removing employees\u201d from CMERS coverage.<\/p>\n

A hearing will be held to allow CMERS \u201cto seek and recover the financial impact and costs,\u201d according to the decision.<\/p>\n

\u201cThis is not the result anyone wanted, and it represents lost opportunities to invest in the priorities that truly matter \u2014 maintaining safe roads and bridges, supporting our schools, and strengthening community services,\u201d Anwar and Foster wrote. \u201cOur focus now must be on helping Ellington recover, restoring confidence in local governance, and ensuring decisions like this are never repeated.\u201d<\/p>\n

\u201cI have full confidence that the Board of Selectmen, at their October 27 meeting, where they will meet with the Town\u2019s labor counsel, will make the best decision for the Town regarding the future of this lawsuit,\u201d Harding said.<\/p>\n

**This article was updated with quotes from Sen. Anwar and Rep. Foster\u2019s letter, and with Matthew Reed\u2019s email**\u00a0<\/p>\n

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