Tesoro calls for new policies on pension funding
Democratic First Selectman Candidate Vicki Tesoro called for a new approach and a stronger focus on strengthening the town’s pension contributions Monday.
According a release from Tesoro, Trumbull’s police and the town’s municipal workers pension funds have not been funded at Annual Required Contributions (ARC) consistently over the last six years, and neither possesses a funding ratio of 100%.
“A strong pension policy is essential to our financial standing because ratings agencies look to pension funding as a sign of financial health in a municipality,” Tesoro said. “The Tesoro team is committed to honoring our commitment to town employees, and to doing so in a way that puts the least possible burden on taxpayers. Our financial management strategy is comprised of a multi-faceted plan for long-term pension stability.”
Components of Tesoro’s plan include:
•Funding the Police Pension at ARC except in times of community or fiscal emergency.
•Allocating 25% of the available balance in the Police Special Agency Fund into the Police Pension each year, except in times of community or fiscal emergency, until the fund has a 100% funding ratio.
•Funding the Town Pension at ARC plus $25,000 in year one and ARC plus $50,000 in year two, except in times of community or fiscal emergency, until we reach a 100% funding ratio.
•Allocating 25% of any surplus budget funds into the Town Pension, except in times of community or fiscal emergency, until the Town Plan has a funding ratio of 100%.
“First Selectman Tim Herbst has made some inroads, but he’s failed to meet the promises of his 2009 campaign,” Tesoro said. “In his 2009 ‘Blueprint for Trumbull’s Future,’ he promised to apply 25% of any town budget surplus to the pension plans. That has not happened once.”
“Worse, his new ‘Trumbull 2025’ plan proposes measures that the Tesoro team believes are bad public policy and most important, are a dismissal of the clearly expressed will of Trumbull voters,” Tesoro added.
The plan includes passing an ordinance through the Town Council that will require that the ARC for town pensions be fully funded every year, thereby allocating millions of dollars to the pensions regardless of Trumbull’s economic climate. The result could be increased taxes at times when residents are least able to afford them. Trumbull voted no to this mandatory language on a 2014 ballot referendum.
“The voters declined to move forward with the concept of forced pension contributions in perpetuity, without regard to economic conditions,” Tesoro said. “They had the wisdom to envision the potentially disastrous impact of a policy of forced contributions that tie the hands of future leaders. And yet, Tim Herbst is back at it, attempting an end run around the will of the voter’s with his ‘Trumbull 2025’ proposal.”
“Our community as a whole will benefit from our policies. A higher bond rating should result in lower interest rates on borrowing,” Tesoro said. “And as we reach 100%, our ARC requirements should decline. Both will reduce annual expenses paid for by our citizens through our tax dollars. We won’t solve our underfunding situation overnight, but scrupulous adherence to this plan will finish the work that needs to be done.”
On Monday, First Selectman Tim Herbst told voters not listen to politicians when assessing which plan is better.
“Listen to the financial professionals,” he said. “Fitch Rating Services and Standard and Poors have lauded our approach to the pension plan and this is exactly why our credit rating was upgraded, at a time when state and federal credit was downgraded.
“We are within striking distance of the AAA and it is because of our management practices,” he added.
In his response to Tesoro’s plan, Herbst discussed his predecessor’s eight years in office, which led to “unfunded pension liability grow worse instead of better to the point where our credit rating risked downgrade.”
“We cleaned up their mess and they are hoping the people of Trumbull have poor memories,” he said. “For someone who holds herself out as a financial professional, the $25,000, plus ARC in year one of her plan is peanuts compared to the $33.5 million we committed to the pension fund in the annual operating budget over the last six years, fully funding the ARC for both police and town pensions for the first time in a generation, while still keeping the average tax rate at 2% a year — the lowest six-year average in all of Fairfield County.”
Herbst added that the most alarming part of Tesoro’s plan was that she didn’t understand how the police special detail agency account functions, and that she wants to lead a $170 million municipal corporation.
“To utilize this money for anything, the funds allocated must be related to special detail activities,” he explained. “Special detail wages are not pensionable wages therefore you cannot justify or rationalize using this account for that purpose.”
Herbst called concern for the pension fund “new found.”
“Ironically, Mrs. Tesoro previously advocated for budgets that provided very generous increases to education that also consistently underfunded the annual required contribution,” he said. “I am a little confused as to Mrs. Tesoro’s new found concern for the pension fund, considering the fact that her husband was a voting member of the Board of Finance for eight years at a time when the ARC was consistently underfunded and below actuarial recommendations.
“The very people who put us in the pension mess we cleaned up are now hold themselves out as those that can do better,” he added. “This truly insults the intelligence of Trumbull voters.”