Letter: Fixing Trumbull's pension plan
To the Editor:
When we took office over four years ago, we were faced with several financial hurtles that would need to be conquered if Trumbull was to be restored to a solid financial footing and see its bond rating upgraded. There were budget deficits, the out of control high school renovation, mismanaged Sewer projects, among others. By far the most damaging financial roadblock to Trumbull’s future was a Town Pension Plan that was grossly underfunded at 27% with past administrations virtually ignoring this 800-pound gorilla. Annual funding was nowhere near what the town’s actuaries were recommending (ARC or actuarial recommended contribution). These are the facts which clearly tell us how past administrations played politics and a financial shell game with the pension plan.
Enter the Herbst administration.
This problem could not be solved overnight so a four-pronged plan was developed with both short-term and long-term goals to put the Town on the road to getting out from under this pension albatross. First was to increase funding on an annual basis and within three years, the Herbst budget had town pension funding at the ARC. Second was to negotiate with all town unions to have all new hires enter a Corporate-like 401 defined contribution plan, so that over the long term, participants in the plan would decline. Third was to have our Pension Board develop an investment strategy in concert with outside investment advisors to grow the fund in the post recession era through better diversification. These 3 steps put the plan on the road to correct decades of neglect and playing politics by past administrations. The fund has grown to an estimated 33% . We recently received an upgrade to the town’s bond rating due, in large part, to our plan to fix our pension funding. However there is a long, long road ahead.
The fourth and final and most important part of the plan is to insure future administrations don’t undue the progress made the last four years. As I said previously, fixing this plan will take a concerted effort over the long haul. To ensure progress continues, we are proposing a Charter Revision to mandate that the plan be funded at the ARC each year. There would be a carve-out provision for emergencies. No politics. No budget gimmicks. Through our discussions with the Wall Street rating agencies, Moody’s, S&P and Finch have all endorsed this plan. In addition to the rating agencies, endorsements of this proposal have come from the Business Council of Fairfield County as well as a Democrat State Treasurer of Rhode Island. If enacted, a coveted Triple A rating for the Town is achievable in the future which could result in reduced interest costs on our debt thus lower taxes.
This is a financial and managerial decision in the best interest of Trumbull, not a political one. My Democrat friends have attacked Tim Herbst for proposing Charter Revision because he is considering a run for State Treasurer. Criticizing him for proposing a fix to the very problem they created. That is politics at its worst and the kind we don’t need here in Trumbull. It will take all four of the steps over the long-term as outlined above including Charter Revision to fix the Town Pension Plan. For once, let’s just do what is right for Trumbull and put politics aside.
John L. Ponzio
Trumbull Town Treasurer