In what may be the first of many states, Connecticut Governor Malloy has proposed that towns pay part of the pension costs of teachers’ pension plans. At this point the State of Connecticut pays the annual costs of teachers’ pension plans and recognizes the full net pension liability for these plans. In an attempt to balance the State budget, Malloy is proposing that towns and cities pay 33% of the annual costs and thus have to recognize 33% of the net pension liability
(Connecticut is one of the states that runs its schools through towns and cities and not as separate political subdivisions on their own.)
Even in states where schools are stand alone political subdivisions, governors and legislators may consider the same type of plan. States with poorly funded teachers’ pension plans are likely candidates to for this type of change. Illinois (36.44% funded) and New Jersey (28.71% funded) would be likely candidates for this type of plan.
The Wall Street Journal article
