State cannot ignore pension problems
From time to time, there is news about an outrageous pension deal obtained by a relatively young, retired state employee that calls our attention to the state pension wonderland inhabited by this privileged group.
The latest concerns Stephen DeRosa, who retired nine years ago when he was 48 and now, at 57, has won a $19,000-a-year increase in his lifetime pension, plus a retroactive payment of $177,000.
The windfall comes by way of the mandatory overtime he endured in a State Police career that saw him rise from Gov. John Rowland's chauffeur to Connecticut's first director of homeland security.
When Mr. DeRosa retired in 2004 after just 20 years in the Department of Public Safety, the Office of Comptroller Retirement Division determined some of the overtime accumulated in his final years would not count toward his retirement.
Among the generous retirement provisions enjoyed by public employees is a rule that overtime earned in the employee's highest salary years can be counted in calculating a pension. But only mandatory overtime counts, and the Retirement Division decided that overtime Mr. DeRosa received on the security detail accompanying Mr. Rowland to Las Vegas and other vacation spots as a guest of state contractors wasn't mandatory. Mr. DeRosa insisted it was and earlier this month, as first reported by The Hartford Courant, Mr. DeRosa won.
Therefore, in addition to the retroactive $177,000, he will see his $75,000 annual pension jump to $94,000 a year, plus cost of living increases for as long as he lives.
The system allowed Mr. DeRosa to retire after only 20 years because it treats the job of state trooper as hazardous, whether on patrol or behind a desk. Mr. DeRosa spent nearly half of his career driving Mr. Rowland, heading his security unit or getting two questionable promotions, first to a deputy public safety commissioner "in charge of dignitaries," then, right after 9/11, as Connecticut's first director of homeland security.
Mr. DeRosa's story is admittedly unusual, but he is part of a public employee pension system that still allows its employees to retire most frequently after 20 years, according to a series of articles in The Day earlier this year on what was rightly termed "a financial time bomb." Retired Connecticut state employees received the highest annual pensions in the country in 2011, the last year on record, despite contributing less than the national average from their paychecks. Their pensions come from the second most underfunded pension fund in the nation, worse than any state except the nearly bankrupt Illinois.
It can only get worse until the legislature enacts meaningful reforms. If the problem is left for another day and a future governor and legislature, the state - and the pensioners-will pay an awful price.
The problem is in the funding. States that set aside around 80 percent enjoy adequate to healthy pension funds but Connecticut's has been in the 45 percent region, down there with Illinois. While the legislature under this governor has made some improvements in reducing pension costs and committing to greater investment in the pension system, the challenge remains formidable.
Public sector pensions are relics of an earlier age when teachers and other public employees couldn't expect salaries nearly as high as those paid for similar jobs in the private sector. Over the years, this has changed and as health care benefits increased dramatically and private pensions began to disappear, public sector jobs have actually become more attractive in many cases.
So why hasn't more been done about closing the $44 billion funding gap maintained by the public employee and teacher pension systems? The tens of thousands of teachers and other state pensioners are represented by more than 17 powerful unions, a potent voting bloc that even Republican candidates are reluctant to challenge.
Negotiators under both Democratic and Republican governors "gave away the store," to use the private sector term for caving in to union demands.
As a result, Connecticut employees contribute around 2 percent of their salaries to their pension funds - while those in other states contribute 5.5 percent to 8 percent - yet Connecticut pensions are the highest in the country.
If Connecticut doesn't undertake serious reform in the near future - at the very least for future employees - the state will face harsh choices, such as cutting promised pension benefits or bankrupting the state to pay its obligations. It is better if the legislature and unions work together to fix the problem now.
The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Izaskun E. Larrañeta, staff writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.
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