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BOF Fights Employee Pensions

Board Sends Letter Arguing Pensions Are Unfairly Supported By The Taxpayer

For the fourth year in a row, the Board of Finance will send a letter to state government leaders about “out of control” retirement benefits to town employees.

“Our board feels strongly that municipal fringe benefits should align to those in the private sector, especially since municipal employees’ wages are now equal to or better than those in the private sector,” Board of Finance Chairman Ron Fedor wrote in the letter.

The board’s gripe is over the increases in cost of retirement for union employees under the state-controlled Municipal Employees Retirement System, of which Waterford is part. For example, in 2011-12 budget year, Waterford taxpayers paid $3.9 million toward municipal employees' retirements, up $879,459 from the previous budget year.

“Over the past several years, the Town of Waterford has experienced a tremendous budgetary increase in the cost of providing retirement benefits as a member of (MERS),” Fedor wrote in the letter. “The Waterford Board of Finance has been forced to grapple with funding these increases annually, sometimes at the expense of its service level.”

The Full Story

As late as 2004, towns would contribute 3.75 percent of a municipal employee’s salary, and 4.25 percent of salary to fire or police municipal employees, to their retirement to fund MERS, and the employee would contribute 2.25 percent.

In the past eight years, the taxpayer’s percentage has increased drastically, while the employees’ contribution has stayed flat. In 2013, taxpayers will contribute 11.79 percent of a municipal employee’s salary to retirement, and 16.65 percent of salary to a fire or police municipal employee, while the employee still contributes just 2.25 percent.

“We feel the burden of fully-funding MERS is not the sole responsibility of the taxpayer,” Fedor wrote. “We would urge a change in legislation to allow for increasing the employee share to a level commensurate to the benefit derived.”

Additionally, municipal employees’ retirement is based on their last three years of total salary, instead of their base salary. Board of Finance members J.W. “Bill” Sheehan, who served in the Navy, and Mark Wiggins, who served in the Coast Guard, both said the military retirement is based on base pay.

“Twenty years in the Coast Guard, if they counted overtime I’d be a millionaire,” Wiggins said.

The state controls MERS. To change the plan, the state would have to pass new laws, Sheehan said.

How Lucrative Is The Plan?

MERS is based on of the number of years the employee worked and the last three years of salary. The last three years of salary earned by the town employee are averaged together. Then for each year a town employee works, the employee collects 2 percent of that average.

For example, if a town employee made $75,000, $80,000 and $85,000 in his or her last three years, and worked in the town for 30 years, he or she would collect 60 percent of $80,000, or $48,000 a year for the rest of his or her life. That number increases over time for cost of living.

The percentage is capped at how much you can collect. In most contracts, you can’t collect more than 75 percent of your salary, which would be achieved after working 38 years.

Editor's Note: MERS applies to all town employees, not just union employees. There are non-union employees who work in town, such as dispatchers, most department heads and the First Selectman. 

David Irons February 10, 2012 at 02:00 PM
While the First Selectman and Governor could take the lead on this, they alone can not make it happen. The town RTM and the state legislature are the ones who need to actually act to make anything happen. I applaud the BOF for finally taking a stand on this issue. It is long overdue and we have heard little more than silence from our leaders for all these years on the subject. The contributions of the employees must be increased and those of taxpayers decreased. The two percent per year figure for retirement calculation also needs to be looked at. I feel that is too high as well. As a federal retiree, mine is calculated at one percent plus whatever I was able to accrue in my 401k and Social Security. And, believe me, I pay far more than the town employees for my health insurance.
Kevin Marcks February 10, 2012 at 02:27 PM
This is absolutley a leadership issue at the State level. I appreciate and support my neighbors that work hard for our town. We should not be reacting to them as if they have doen something wrong. This is at the heart of how Government fails us. To make these financial committments without any regard to the impact down the road is irresponsible. It is not as if our legislators could not see this coming it was only 7 years ago. To have the towns portion of pension benefit more than triple and in some cases more than quadruple is out of control. Mr. Malloy, our issue is spending, stop the madness.
John Sheehan February 10, 2012 at 04:15 PM
To be clear, the current retirement system is based on legislation that originally passed in 1949. Waterford joined the MERS in July 1988 when the Municipal Contribution rate was 9.29% for Police and Fire and 7.07% for other employees and Millstone contributed around 75% of the taxes. The municipal contribution rate was lowest between 2000 and 2002 when it was 3.75% for Police and Fire and 2.75% for other employees. Only sixty of the 169 municipalities in the state participate in the MERS. All of the terms are set by state statute so any changes must be made by the state legislature. Since the legislature is considering changes to the state retirement system this session, it is appropriate for Waterford to ask that the legislature also consider changes to the municipal retirement system.
Patricia February 10, 2012 at 04:53 PM
Well we certainly are not living in 1949, so it is clearly time for some change. Costs have spiraled out of control and the well that supports those cost is shrinking rapidly. Do state statues also set the terms of health benefits or is this strictly a benefit that the town is in charge of? Waterford (our town representatives) need to start requesting from the state the changes needed to bring things in line with the economic reality of 2012. It is not about blame but finding solutions that do not overburden all tax payers.
John Sheehan February 10, 2012 at 07:13 PM
Helath benefits are negotiated between the unions and the Town. The Town has put the health insurance out to bid and those bids were received in the past week. The experts tell us it will take two to three weeks to evaluate the bids before the health plan for the upcoming fiscal year starting JUL 1, 2012 is chosen. Based on the current plan usage, don't be surprised if health insurance is still very expensive. The unions have been very cooperative with the town in these negotiations thus far.
Patricia February 10, 2012 at 07:46 PM
I am not sure what your saying. Health Insurance is very expensive and much more so for those in the private sector. From what I can see Waterfords health benefits far exceed those of surrounding towns and the US government itself. A $5.00 copay seems an obsolete luxury everywhere except in the town of Waterford. So yes health insurance is expensive for all of us but shouldn't we try to bring this huge expense for Waterford taxpayers in line with reality and have it be a shared expense instead of a huge tax burden?
don February 10, 2012 at 10:10 PM
Patrica the towns 1303 union is expecting to have all there co pays go up and we are on board with this , the union is for the past year to year and a half have been waiting for the town to ask for this , but no one has, just a lot of here say in the contract up coming we are expecting to help and this includes the price sharing . As for all i know there is not one that I know off in this union making anything near 75 to 85 grand a year ,we are the lowest paid ,yes we do have good insurance but please don't forget years ago no one wanted to work for a town they were the worst job now people wish they had them . Not the employees fault. Tomorrow when it is snowing and you if you are lucky to be home we will not we will be out there til it is over and your roads are save to go out . No I am not crying just have some respect , if it was Christmas this would still be the same situation but we would be missing our kids opening there present's ,and in 25 plus yrs here it has happened it stinks, there is no money worth missing it but we have and will .
don February 10, 2012 at 10:11 PM
In my comment I am just trying to give you our side not trying to bash anyone I pay taxes here to I have lived here for 38 yrs , Thank you
John Sheehan February 10, 2012 at 11:36 PM
Waaterford is currently self insured with an insurance company administrator. I wrote a few columns last year on the health plan so, if you are interested, check the PATCH archives under my name. It is my understanding that the town asked for bids on a fully indemnified plan by an insurance company, self insurance, and a bid from the new state administered plan for municipalities and non profits that was permitted during last year's legislative session. No matter what the plan, all will look at the current plan's usage to determine the cost. Unfortunately, there is high usage of the plan due to some serious chronic illnesses affecting town employees or their dependents (this is true whether Board of Education or general government). That means even the lowest bid will be high. You may have read in the DAY that Groton is reducing the cost of their health care due to decreased usage by the clients (Groton is also self insured). Eventually, the health care costs will be reduced but not likely in the near future. After the bids are received, it must be determined which bid best fits the various medical plans negotiated with the unions. Again, I want to emphasize that the town unions have been cooperating with the school and town administrations to find the best and most cost effective match. Just don't expect a bargain no matter what the bid.
Patricia February 11, 2012 at 01:00 AM
I am not speaking about salaries or the fact that jobs require people to work hours they would prefer not to work. Don you have a job and your are paid to do your job. I personally know plenty of people who will be out with you tomorrow making the roads safe for everyone and yes they have missed watching their kids open Christmas presents and they are NOT getting the luxury of a health benefit with a $5.00 copay. Many of them can't even afford insurance yet they pay for yours. The issue is that we all need to get realistic with the way things are in TODAYS economic climate and understand that everyone is paying. It is costing everyone in the town of Waterford. When I see something like a $5.00 copay, it makes no sense to me. It is not realistic and it is a burden on all taxpayers. Please do not make this personal....and I do have respect. Not once have I been disrespectful in the way I present my view.
don February 11, 2012 at 01:29 AM
Patrica I do not think you are disrespecting the workers but it seems every time a article comes out about Waterford its the employees fault, this is not true . A year has gone by here we are at budget time and we are hearing the same thing we are looking in to new ways of health care what happen to the last 12 months ,nothing has been done since last year. As I said the largest union in town not including teachers is waiting for the town . We agree 5 dollar co-pays is overdue for change it is not in our court . It's frustrating to be bashed every time someone wants cuts it is alway's the grunts, how about looking at the upper brass for cuts .
Paul February 11, 2012 at 01:42 AM
I think people have to be very careful when talking about someones salary & benefits. I know I would not like it if someone questioned mine. There are many factors that come into question when talking about public employees salaries and benefits. These include a towns ability to pay (which most citizens or employees don't even know what this means), the towns grand list, and the towns population etc... One must first look at an employees job description and than compare it to the same job in another town. In most cases there are huge differences. These differences occurred due to the revenue from Millstone which is no longer feasible. In addition, the economy is terrible. Therefore, things must change. For the most part Waterford employees are paid very well. They also do a great job! But we cannot as a town continue at this pace and provide the same quality service. Cuts are going to have to happen the debate is where and how much! I hope the adults and leaders of this town think about the whole community and not be self serving when making their decisions.
don February 11, 2012 at 02:01 AM
nicely said Paul, but I think the only way you are going to get rid of the long standing employees are incentives ,I know a lot of people don't want to hear it ,but the biggest factor is health if the town offer a incentive for anyone over 25 yrs more might take it . we had a good number of people leave in the fall , the town does pay but the employee is responsablity for 100 percent of any added cost from that day forward . the town will pay the same price after the person leaves ,this way you can bring in lower paid workers and stablize the budgets. My thought only give them a limited time to take this package.
Patricia February 11, 2012 at 02:24 AM
Excuse me but I did not bash anyone at all, not an employee of the town nor a town representative. Please re read what I said and keep it in prespective. I know you are emotional about this but try to stick to what I said. I said a $5.00 copay in this economic climate is a luxury and an unrealistic burden to all of Waterford a tax payers. If you do not agree with this then say so but please do not accuse me of being disrespectful or of bashing anyone. I totally agree with Paul when he says "the economy is terrible. Therefore, things must change. For the most part Waterford employees are paid very well. They also do a great job! But we cannot as a town continue at this pace and provide the same quality service. Cuts are going to have to happen the debate is where and how much! I hope the adults and leaders of this town think about the whole community and not be self serving when making their decisions."
don February 11, 2012 at 02:40 AM
sorry if you thought I was on your case was not trying to say that ,but I did say the union has been waiting for almost a year to talk, the union contract was up in july , we had one offer and it was take it or leave it , there was no problem with the raise in co pay we were expecting that and had no problem . cant say what was the holdup right now but was not a big deal .we would love to settle with out lawyers it save the town a lot of money .
Patricia February 11, 2012 at 11:15 AM
It sounds as if everyone agrees that things have to change for the good of ALL Waterford taxpayers. I don't understand why the town has not acted sooner on this, that is an interesting question. Waterford has had the luxury of spending, spending and spending. That was terrific when times were economically sound and Millstone was turning out most of the taxes. Those times are gone, the entire country is undergoing serious economic hardship. New London Couty has been hit hard with companies downsizing or closing and leaving the area. We are lagging far behind the rest of the state in recovering from this economic mess. So we need to be realistic about things. I hope as Paul so nicely put it "that the adults and leaders of Waterford think about the whole community and not be self serving when making their decisions".
David Irons February 11, 2012 at 02:02 PM
I don't know about any other health insurance plans, but the one I carried over into my civil service retirement actually had a decrease in the premium this year. My Medicare Part B premium has also decreased by about $15 this year. Granted the health plan decrease is after two years of outrageous increases (39 and 42 percent). I'd be curious as to what others have experienced with rates this year. If this is a pattern town rates should follow suit.
David Irons February 11, 2012 at 02:06 PM
Okay, reading John's 6:38 pm comment, it doesn't look as if this will happen.
fedspy February 11, 2012 at 10:32 PM
all these comments make sense to me, and the BOF sounds like they are doing their job, but what about our representatives and senators, the governor's office, the ones that make the laws , where are they with this fiscal fiasco, yup, the governor is asking for more money to fund failing school districts, money the state does not have. lets throw more money at the problem, why do these districts have a superintendent that probably gets paid close to $200,000, and teacher salaries close to averaging $80,000 a year , not counting benefits not solving their own problems, maybe the problem in these districts could be the type of students they have, so all the fault is not on the educators, but the calibur of students. a little off the subject, but i doubt if anything will happen, it is a democratic run state, and has been for years, i expect nothing to happen except talk, and no action, where is ms. stillman on the subject, or any of the other representatives in our district ? does anybody know ? i dont.
Casual Observer February 11, 2012 at 11:51 PM
Pay the town employees... Teachers, cops, town/highway, rec n park all have difficult jobs and shood be paid more not less. Take into account the job description / hours worked and these people aren't being paid much at all. If you people are complaining about the over the top benefits apply for a job when it opens and if your qualified you'll be hired. Bingo! If you want to wine and complain look at our government leaders that didn't have the foresight to save for a rainy day when the big money was coming in from Millstone.......Secondly, is there any truth that AOL is looking into cutting patch b/c it isn't turning a profit?
Patricia February 12, 2012 at 12:43 AM
Casual Observer you really did not get the point did you.
Wayne February 12, 2012 at 01:39 PM
As a taxpayer i would be willing to cut municipal employees pensions as much as Wiggins and sheehan are willing to cut theirs. Once again, the pols are willing to cut anything that doesn't harm them.
Patricia February 12, 2012 at 01:51 PM
Unfortunately, that is human nature. A solution would be to find those pols that can rise above (not the people...that is easy) this self serving nature and lead by example. I don't think there is anyone out there in Connecticut or maybe even the Nation for that matter.
John Sheehan February 12, 2012 at 09:03 PM
I suspect that Mr. Wiggins and I will see some adjustment in our pensions and benefits when Congress gets around to working on the deficit. However, as Mr. Wiggins noted at the BOF meeting, our pensions do not include any overtime because we never got overtime. Whether we worked twenty four hours in the day or eight hours in the day, we received the same salary. Currently our pensions are based on one half of our base pay on retirement at twenty years up to two thirds of our base pay at thirty years. There are also some whose retirement pay is based on the average pay of the last three years of active duty. Essentially we paid for this benefit by being away from home and in harms way (although in my case, never had to fire a shot in anger) for months at a time and missing many key family events and holidays. This retirement pay also allows me to devote many hours of volunteer time without worrying about living expenses. I don't begrudge any town or state employee their retirement benefits but I agree that there needs to be some adjustments due to the expense to the taxpayer.
Paul February 12, 2012 at 10:47 PM
As I have said before, no one likes it when someone else's salary & benefits are questioned. However, when the same job description of most town employees are compared to like jobs in other surrounding towns of like size and grand list the Waterford Town employees are paid very well. It is great that you got that through past negotiations and and from what I know you all work as hard or harder as the same people from other towns. But John Sheehan is right adjustments need to be made.
Patricia February 13, 2012 at 12:28 AM
Please remember that there are tax paying citizens in Waterford in the private sector that do not have health insurance, vacation or sick time, over time or pension benefits. They work long hard hours and miss holidays and special times with family to work to put food on the table and pay their bills. They have no one that makes contributions into thier retirement plan and no union to fight for them. They pay their taxes so that Waterford can offer it's employees all the things stated above. I don't think any of them would begrudge town employees a decent salary and benefits but when these things are out of line with the economic reality and put a hardship all taxpayers.....then as Paul said "adjustments need to be made".
Water Ford February 13, 2012 at 01:36 PM
Perhaps Dominion should propose building Millstone 4. The NRC just approved the first new plant in 30 years in Maryland last week. This brings construction jobs, permanent jobs, increases the tax base and even many of the “green” politicians now support nuclear power. We already have a skilled workforce, infrastructure and location.
Paul Petrone (Editor) February 13, 2012 at 02:22 PM
I believe Dominion is planning to build a new reactor in Virgina, which is a regulated market, before going into Connecticut. This is for a few reasons. In a regulated market, Dominion can increase rates for the cost of the construction immediately, where in an unregulated market, it has to build it first and then make the money back later. I believe Dominion wants to build one in Virgina, see what it takes to build to the new specifications, and then ensure that Connecticut has the right regulatory and fiscal climate to build one here. Although if you are looking for an expert to answer that question, I hope J.W. "Bill" Sheehan writes in, who is the chairman of the Nuclear Energy Advisory Council.
John Sheehan February 13, 2012 at 04:08 PM
Officials at Dominion have told me exactly what Paul Patrone stated in his comment above. The new reactor at the Dominion North Anna site is still in the approval process with the NRC. After Dominion has successfully completed that plant, the company will know how long and how much. It will then be able to come to CT and say that it will build a new plant only if certain guarentees are provided and certain regulations are changed. One BIG THING that will need changing is the Moritorium on Nuclear Power Plants until the Federal Government resolves the storage of long lived high level nuclear waste such as spent fule that is in state statutes.
John Sheehan February 13, 2012 at 04:09 PM
That is fuel.

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