Pension Commission Explores Selling State Assets
Is it time to start selling the farm to pay the bills?
A newly formed panel charged with corralling Connecticut’s out-of-control state employee pension costs is exploring several options, including selling state-owned real estate and other assets.
The commission, which currently has 11 members and two vacancies, is charged with making recommendations to the state legislature for addressing billions of dollars in unfunded pension liabilities.
“The commission will consider the feasibility of maximizing the value of state capital assets, such as select, state-owned real estate and the Connecticut State Lottery,” said its chair, state Rep. Jonathan Steinberg (D-Westport).
“If the theory proves viable, those enhanced-value assets will generate revenue streams which will be dedicated to paying down the unfunded liability.”
Parks Safe, Lottery a Target
Steinberg said it would not involve selling state properties that receive frequent public use, such as parks. While these mechanisms may help address pension liabilities, long-term structural changes to the system are necessary.
But it could include leasing, transferring, or even borrowing against state assets that include unused land or buildings.
Commissioners also discussed dedicating the proceeds of the state lottery—expected to be about $350 million this year—to bolster underfunded pensions.
"This includes ending the use of overtime in pension calculations, and reforming healthcare for retirees," she said.
The commission includes state budget secretary Ben Barnes and Comptroller Kevin Lembo.
While these mechanisms may help address pension liabilities, long-term structural changes to the system are necessary.
Barnes presented documents showing that the State Employee Retirement System, with about 50,000 retirees and 50,000 active members, is about 37% funded. The Teachers' Retirement System is 56% funded.
He said the problem stems from years of shorting the pension system.
"There are no quick fixes to a pension system that is underfunded," Barnes said.
The commission must report its recommendations to the 2019 General Assembly, which convenes in January.
"If this concept proves successful, we will not only regain control of our financial future, we will demonstrate to our broader audience, including investors and companies considering doing business here, that we have our house in order," Steinberg said.
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