According to a press release from the Governor’s office, the measure also requires that the state fund the Teachers’ Retirement System at 100% of the actuarially-recommended contribution – a goal the state has mostly missed over the last two decades.
The teachers’ fund holds $10.2 billion, which means it only covers nearly 60% of its obligations.
The state currently foregoes 8.5% in investment earnings on the unfunded liability and the issuance of $2 billion in bonds with a maturity of 25 years will allow Connecticut to refinance a portion of the debt at a lower interest rate, estimated at 5.6%, the press release stated.
“The fund has had a chronic shortfall for two decades and last year we finally took appropriate action to begin to address the unfunded liability,” Rell said in the statement. That’s when Rell approved $245.6 million to fully finance the teachers’ fund for fiscal 2006 and 2007 and the new budget also directs full payments in fiscal 2008-09.
State Treasurer Denise Nappier gave her blessing to Rell’s signing of the bill, saying in a statement that the measure moves the state in the “right direction to toward ensuring the future financial stability of the Teachers’ Retirement Fund while saving billions of dollars in taxpayer money.”