Higher Education and Employment Advancement Committee
JOINT FAVORABLE REPORT
Bill No.: HB-5115
AN ACT CONCERNING THE UNFUNDED PENSION LIABILITY PORTION OF
THE FRINGE BENEFIT COST FOR EMPLOYEES OF THE CONSTITUENT
Title: UNITS OF THE STATE SYSTEM OF HIGHER EDUCATION.
Vote Date: 3/10/2020
Vote Action: Joint Favorable
PH Date: 2/20/2020
File No.:
Disclaimer: The following JOINT FAVORABLE Report is prepared for the benefit of the
members of the General Assembly, solely for purposes of information, summarization and
explanation and does not represent the intent of the General Assembly or either chamber
thereof for any purpose.
SPONSORS OF BILL:
Higher Education and Employment Advancement Committee
REASONS FOR BILL:
This bill mandates the state comptroller to fund the unfunded pension liability portion of
constituent unit employees' fringe benefits that are currently paid outside of the institutions'
General Fund block grant using resources appropriated for the State Comptroller-Fringe
Benefits. The intent of the bill is to provide funding for said fringe benefit costs, which are
currently unfunded.
RESPONSE FROM ADMINISTRATION/AGENCY:
Kevin Lembo, State Comptroller, Office of the State Comptroller: Comptroller Lembo
writes that the unfunded pension liability in the State Employee Retirement System (SERS)
has grown for decades and created budget problems through the state, citing that all the
state's funding sources currently help to make the full pension contribution for SERS. His
office estimates an additional $93.8 million would need to be appropriated into the General
Fund SERS appropriation for FY 2021. He recommends that the General Assembly consider
that any reforms or changes should honor the State's commitment to fully fund the SERS
pension fund as calculated by the SERS actuary and that reductions in unfunded liability
costs for higher education units will require a commensurate increase in costs to the State's
General Fund.
Ben Barnes, Chief Financial Officer, Connecticut State Colleges and Universities: Mr.
Barnes writes that this bill would provide much needed financial relief for the unfunded
pension liability component of CSCU's fringe benefits and would have a positive fiscal impact
on the Connecticut State Universities, UConn, and UConn Health Center. He cites that the
state universities and community colleges have had to raise tuition in order to keep up with
the growing fringe rates.
Scott Jordan, Chief Financial Officer, University of Connecticut: Mr. Jordan submitted
testimony in support of the bill on behalf of UConn and UConn Health. They feel that the
unfunded pension liabilities must be funded to provide financial relief for UConn and that this
bill proposes a commonsense and sustainable solution to the growing legacy costs. They
believe that UConn Health is a valuable asset of the state economy which provides first-rate
education, develops a highly-skilled workforce, and stimulates and supports research. They
cite that UConn has had to significantly raise tuition and cute department funding due to the
financial burden imposed by the unfunded pension system. They express concern about the
unfunded pension system causing a decrease in the institution's research and clinical
competitiveness because they must cut spending on research grants, research dollars, and
technologies. They propose adding language to the bill that would specify that the fringe
benefit recovery rates charged by the state to public higher education institutions do not
exceed normal retirement costs.
NATURE AND SOURCES OF SUPPORT:
Greg Crerar, President, SUOAF/AFSCME: Mr. Crerar submitted testimony in support of the
bill on behalf of SUOAF/AFSCME Local 2836. They feel that the unfunded pension liability of
the CSCU fringe benefits is an unfair burden on the students and faculty. They believe that
this bill will ease the financial burden on placed on the CSCU and will free up additional
resources that will benefit the students. They also opine that the cost of paying these
unfunded pension liabilities should not be passed on to the students through tuition increases
as has happened.
Bill Garrity, President, University Health Professionals AFT Local 3837: Mr. Garrity
submitted testimony in support of the bill. He feels that the State legislature, by not funding or
underfunding the SERS pension system for decades, has not kept its side of the contract. He
cites the comptroller in saying that the State has saved $1.7 billion as of 2019 because the
state employees working at UConn Health and all other state employees adjusted their
retirement plans in 2017 in order to give back to the SERS retirement plan fund. He feels that
the State must honor its side of the contract and fund the unfunded SERS pension system.
Dr. Stephen M. King, Professor of Biology, University of Connecticut Health: Dr. King
submitted testimony in support of the bill. He feels that the unfunded pension system puts
UConn faculty at a competitive disadvantage when they apply for federal or other grants. He
notes that the number of people that can be actively working on a project in the laboratory is
much lower than at other institutions of higher education, including in Connecticut and the
northeastern United States. He urges the state legislature to reduce the unfunded fringe
liability charged to research grants because it will have a direct impact on UConn Health's
ability to perform ground-breaking biomedical research and will enhance future grant funding
prospects.
Dr. Bruce J. Mayer, Professor of Genetics and Genome Sciences, University of
Connecticut Health: Dr. Mayer submitted testimony in support of the bill. He cites that his
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laboratory at UConn Health has found obtaining funding for research grants more difficult in
recent times due to the high fringe rates and legacy costs associated with the unfunded
pension and retirement healthcare liabilities. He expresses concern that the difficulty in
obtaining such funding has led to his laboratory being less productive than laboratories at
other institutions of higher education and not being able to hire an adequate number of high-
tech workers. He believes it is unfair to impose the cost of the unfunded pension liability on
UConn researchers.
Dr. Thomas J. Peters, Professor of Mathematics and Comp. Science, University of
Connecticut: Dr. Peters submitted testimony in support of the bill. He expresses concern
that economic restraints, like the unfunded pension system, can affect his ability to be
awarded federally funded research grants for his field of science. He believes this bill
provides a remedy on the economic side of improving the chances of UConn being awarded
research grants.
Cindy Polinsky, Executive Director, UCHC-AAUP: Ms. Polinsky submitted testimony in
support of the bill. She feels that UConn Health is an invaluable science hub that provides
high quality healthcare to its patients and receives $100 million in extramural research grants
and contracts annually. However, she expresses concern about the tenuous nature of the
unfunded legacy costs and the high fringe rate approaching 74% this year for their scientists
seeking research grant funds. She notes that the average fringe rates at all laboratories
nationally is about 40%. She states that UConn Health and its researcher may only realize its
full potential if the financial burden of the unfunded pension system, legacy costs, and high
fringe rates are eliminated.
Dr. Annabelle Rodriguez-Oquendo, Professor of Cell Biology, University of
Connecticut Health: Dr. Rodriguez-Oquendo submitted testimony in support of the bill. She
expresses concern about the negative effects that high fringe rates have had on her research
efforts at UConn Health, stating that she has pivoted towards conducting research that does
not require use of lab technicians because the high fringe rates have rendered funding such
positions unfeasible. She believes the State of Connecticut needs to have fringe rates closer
to 40% to be able to fairly compete with other institutions for research grants that come from
the National Institute of Health.
The following individuals submitted similar testimony in support of the bill, expressing concern
for the high fringe rates and the affect they have or could have on the research at UConn
Health in their respective fields of science:
Dr. Patrick A. Murphy, Assistant Professor, University of Connecticut Health
Dr. Daniel W. Rosenberg, Professor of Medicine, University of Connecticut
Health
Penghua Wang, Assistant Professor, University of Connecticut Health
NATURE AND SOURCES OF OPPOSITION:
Isabel Blank, Senior Manager External Affairs, Yankee Institute for Public Policy: Ms.
Blank submitted testimony in opposition to the bill. She expresses the view that exempting
university funding sources from have to pay any portion of the unfunded pension liability
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would merely rearrange the unfunded liability burden and not achieve real reform. She
proposes the following alternative solutions to the unfunded pension liability problem:
(1) Change the formula for cost-of-living adjustments, (2) adopt a cap on pensionable
salaries, and (3) reform discount rate determination.
Leonard A. Fasano, Senate Republican Leader, Connecticut General Assembly:
Senator Fasano submitted testimony in opposition to the bill. He expresses the view that
there has been scarce thoughtful deliberation on how salary and hiring decisions at UConn
and UConn Health effect the state's finances. He also expresses concern about UConn
continuing to add costly staff to their rosters during and despite these financial troubles. He
believes the state and its taxpayers should not continue to fund the costly pension system of
these institutions because it costs too much and would only worsen the situation by allowing
these institutions to continue to rely on taxpayers' money. He opines that funding the SERS
pension system is an unaffordable burden for the state. He suggests that other solutions be
sought, such as a public-private partnership or ending the state's ownership of UConn Health.
Reported by: Justin Boutin, Assistant Clerk Date: March 11, 2020
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