There’s a giant elephant hiding in a back room somewhere at Stratford Town Hall, and another one lurking over at 1000 Broadway.
In the wake of Mayor’ John Harkins’ proposed $189 million town budget released Monday, there remains a larger-than-life unfunded pension liability that remains to be addressed and continues to pose a huge challenge to budget planners in Stratford.
Estimated at nearly $110 million and growing – that number represents the gap between what the town pension plan holds in existing assets and what it will owe to future town retirees.
And according to one estimate prepared for the town, that gap is likely to grow wider in the coming years even as taxpayers continue to contribute more and more into the pension plan in the form of increased municipal property taxes.
In fact, in the current fiscal year 2010-11, town officials said that taxpayers have forked over more than $8 million into the town pension plan, compared to nearly $7 million in 2009-10, which came on top of nearly $5.5 million in 2008-09.
While Mayor Harkins’ proposed 2011-2012 budget summary released Monday did not break down what his proposed pension contribution would be during the upcoming new fiscal year, he alluded to the problem in his budget message.
“Employee benefits represent a significant increase in this proposed budget,” Harkins wrote. “This is a fixed cost that must be controlled moving forward.
“I remain committed to working with our municipal labor unions to reach mutually beneficial solutions for the betterment of all town residents.
“I would like to extend my gratitude to the Stratford firefighters union, which came forward with more than $124,000 in one-time givebacks, which are included in this proposed budget.”
However, the mayor more than hinted that additional steps need to be taken in order to bring this situation under control, even during the current budget deliberations that are just beginning with the release of the mayor’s proposal.
“Successfully coping with a difficult economic environment will require sacrifice from all quarters,” the mayor wrote. “It is my hope that more bargaining units will come forward with concessions as the budget process evolves.”
There was no mention by the mayor in his budget message of the new police union contract approved recently by the Town Council due to the fact that any savings would not be realized well down the road. In that new contact, the town and the police union agreed that all new police department hires would receive 401 (k) retirement plans and not the formal pension plans that existing union members retain.
A significant number of current police and fire department retirees will continue to be entitled to receive pensions based on a calculation that also takes into account each retiree's earned overtime, sick and vacation time, a situation that can result in retirees actually collecting greater pay in retirement than their highest base pay.
It is that fact that actuarial experts say will continue to push Stratford’s unfunded pension liabilities ever higher, even as overall contributions from taxpayers increase.
Another Situation Entirely at Board of Ed
Meanwhile, over at Board of Education headquarters, there is a budget elephant of a different sort looming in the form of a $631,291 shortfall in what educators have said they need for the 2011-2012 school versus what Mayor Harkins proposed for education in his budget released on Monday.
The mayor noted in his message, “The Board of Education approved an appropriations increase of $1.63 million, or a 1.77% increase over [the current] FY 2011. My proposed operating budget for the Board of Education contains an increase of $1 million, or 1.08%, which is $631,291 below the board’s request.
“This represents .26 mills in a proposed 1.64 mill increase,” the mayor continued. “This level of funding will not require the closing of any schools, although moving forward in tough economic times, it should be noted that the Board may have to address the question of long-range facilities planning once again in the future.”
And that, taxpayers of Stratford, represents a lot of peanuts.