Thursday, October 30, 2014

The Malloy Truth Gap

The Malloy-teacher gap just got wider. According to a “factcheck” story in CTMirror , claims made by Governor Dannel Malloy concerning his role in protecting teachers’ pensions are a bit of a stretch.

The leadership of the Connecticut Education Association (CEA), one of Jonathan Pelto’s targets before the penniless Mr. Pelto withdrew from the gubernatorial race, has been touting Mr. Malloy as the “first governor in Connecticut’s history to annually fully fund teacher pensions during his first term in office and guarantee full funding in the future.” Other governors certainly have short-sheeted the teachers’ pension fund. However, CTMirror notes, the leadership “doesn’t mention that Malloy had little choice but to do so. His hands effectively were tied by legal guarantees put in place by Gov. M. Jodi Rell and the 2007 legislature.”

On his path to re-election, Mr. Malloy has steadily been shedding teachers. Glastonbury teacher Martin Walsh, now challenging CEA President Sheila Cohen, offered a demurral: “This is the way they intend to turn out votes for Malloy, and it is unethical. They never told us he (Malloy) didn’t have a choice.”

Here was an occasion when Mr. Malloy truthfully might have said that former Governor Jodi “Rell made me do it.” Mr. Malloy has frequently on the campaign trail loaded his problems on the backs of his predecessors, two Republican governors and Lowell Weicker, who is sui generis, in a class of his own, neither Republican nor Democrat.

So then, it was not Mr. Malloy but the much abused Mrs. Rell and the 2007 General Assembly that “guarantee full funding [of the often neglected pension fund] in the future.” Mr. Malloy had no choice but to fully fund the teachers’ pension fund. Having accepted a proposal offered by State Treasurer Denise L. Nappier in 2007 “to borrow roughly $2 billion and deposit it into the cash-starved pension fund,” CTMirror notes, “Connecticut promised in the bond covenant – its contract with investors who bought those bonds – to budget the full pension contribution required by analysts for the entire 25-year life of the bonds.”

There was an escape clause in the covenant: The fund’s fiscal health permitting, officials might reduce contributions if the fund’s solvency “exceeded certain benchmarks – a condition never met since the bonds were issued.” The reader will note the polite demurral. In fact, pension funds in Connecticut are all bleeding at the ears.

A biennial actuarial evaluation in 2012 showed that Connecticut held $9.7 billion in assets and $23 billion in liabilities in its State Employees' Retirement System (SERS); 42.3 percent of its obligations were funded, and $13.3 billion, or about 58 percent, were unfunded. The Connecticut Post reported at the time that “Connecticut is one of nine states, according to CNBC, that have a ratio of less than 60 percent, and among those nine, it is second from the bottom of the list, just behind Illinois.” An 80 percent funded, 20 percent unfunded ratio is considered healthy.

In 2007, the possibility of becoming governor was but a glint in the ambitious eye of Mr. Malloy, who was then Mayor of Stamford. When the Rell legislation was passed, Mr. Malloy had a year earlier lost his bid for governor in a Democratic primary to then New Haven Mayor John DeStefano. In 2010, three years after the ink had dried on the bond covenant signed by Mrs. Rell, Mr. Malloy won the gubernatorial nod in a primary with Ned Lamont.

Very expensive political consultants will tell incumbent chief executives to take credit for the good done by their predecessors in the opposing camp, while pressing on their brows those thorny problems the chief executives are themselves reluctant to own. Harry Truman’s buck need not always stop at the desk of a chief executive. Sometimes, through clever language manipulation, an ambitious, vote hungry governor may press upon his own brow laurels deservedly given to his predecessor in an opposing party.  The feat can only be engineered during those times, frequent in Connecticut, when the media’s attention is distracted by some shiny bauble dangled before its nose by a seasoned incumbent.

Connecticut’s pension problem is a leprous sore that can most successfully be addressed by increasing the retirement age for state workers while reducing Cadillac benefits. That is the only solution to pension creep. The unwillingness on the part of Connecticut governors and legislators to attack expenses are the shovels used to dig the state’s grave. It is cowardice and an irrational fear of unions that has prevented governors and legislators from successfully addressing the problem of unaffordable state pensions. Every time a Republican anywhere in the nation has suggested rolling back pension costs or reverting to a different method of financing pensions, he or she has been roughly, unjustly and successfully assaulted by precisely those interests that, in Connecticut, favor maintaining the unsustainable pension status quo.
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