HARTFORD, Conn. (WTIC Radio) - Connecticut is making a historic down payment of $60 million toward long-term pension liabilities with excess reserves from the Rainy Day Fund.
State Treasurer Shawn Wooden announced his decision Thursday to contribute the excess amount of about $61.1 million to the State Employees' Retirement Fund (SERF).
On the steps of the State Capitol, along with Governor Ned Lamont and CT Budget Chief Melissa McCaw, Wooden explained that when the Budget Reserve Fund, or the Rainy Day Fund, equals 15% of the net general fund appropriations for the current fiscal year, the excess is to be transferred to either the SERF or the Teachers' Retirement Fund.
Wooden said the SERF has the greater unfunded service liability between the two.
According to state officials, this is the first time a down payment has been made toward pension debt in the state's history.
When it comes to how this impacts the state's budget, McCaw said the downpayment will yield about $5 million in savings annually over a 25-year period.
Lamont said this will allow Wooden to borrow money at less cost "because people say Connecticut is slowly getting its fiscal house in order. That means that we pay less interest. That means you have to pay less taxes to subsidize that interest. It also means that people are taking a second look at our great state as a place they want to live."
The growth of the state's Rainy Day Fund, according to Wooden, is a result of smart policy and fiscal discipline over the past few years.
With a looming $2.1 billion budget deficit projection for Fiscal Year 2021, Wooden said the time is now for state leaders to look for new opportunities that can "offer a path to a strong and sustainable economic recovery."