Underfunded pensions dwarf deficit

It's one of the simpler guidelines in politics: Be careful what you promise; someone might ask you to pay up.

As the state of Connecticut prepares to face a gaping deficit in its budget for the next two fiscal years, lawmakers and Gov.-elect Dan Malloy also will be forced to reckon with an equally challenging and even bigger problem: the long-term cost of the pensions and health care the state has promised its retirees.

The challenge is one inherited from past legislators and governors, who despite occasional periods of reform and investment have repeatedly failed to set aside money for pension accounts - accounts that will owe tens of billions of dollars to retired workers over the next 30 years.

The reason isn't just the collapse in stock market investments, said State Treasurer Denise Nappier, whose office manages the investment of pension funds. That collapse only exacerbated an underlying, older problem, she said: The state for years has failed to set aside the funds it will one day be compelled to pay.

"I think the biggest issue is the fact that the state has not exercised discipline in funding its obligations," Nappier said in an interview last week. (more)