“There is a solution.” So proclaims Democrat Alex Bergstein in a recent op-ed in this paper and in her glossy campaign literature.
State Senate candidate Bergstein’s Eureka-like announcement concerns the state’s severely underfunded public employee pension funds, a problem which many people view as almost intractable.
“The solution” is a “shared risk model,” which Bergstein says the Province of New Brunswick in Canada “moved to” in 2012 and “reduced its liabilities by 30 percent.”
“There are no easy undiscovered instant solutions to the pension problem,” responds five-term Senate incumbent, Republican Scott Frantz. “Besides, the problem is cost, not risk. The state already has unaffordable pension costs. There’s no risk about it.”
Bergstein is vague about New Brunswick’s actual transition to the new system. When questioned about it at a debate in New Canaan, she characterized the “move” as “voluntary,” despite that it has spawned multiple costly lawsuits from employees and retirees that remain unresolved to this day.
This is an inconvenient truth for Bergstein, whose literature offers the shared risk model as a peaceful alternative to abrogating contracts. She says “Ripping up contracts would risk costly litigation.”
Wouldn’t Connecticut’s public union bosses sue if their extraordinarily generous 10-year SEBAC contract were challenged? Bergstein poses the question rhetorically “Why would the unions agree,” and, then, citing unfavorable trends for unions, states “The answer is that they don’t have a choice.”
Really? Union bosses and state Democratic leaders might disagree.
Indeed, where was Bergstein just one year ago? In summer 2017, her party extended the SEBAC contract five years to 2027 on a strict party line vote. In October 2017, the chief negotiator for the state’s public sector unions sent a personal letter to each and every member of the General Assembly threatening to sue the state if the legislature adopted modest pension reforms that would take effect after the expiration of the 10-year SEBAC contract.
In the case of New Brunswick, Bergstein glosses over the complications entailed in including retirees as well as existing employees and future employees in the new system. Most retirees and many existing employees have sued claiming violation of their constitutional rights.
In contrast, it is easy to adopt a new system for future employees, as Connecticut did in 2017, when it created a new Tier IV for new state employees. Tier IV workers have a new lower-cost form of hybrid pensions.
The problem is that there are only 54 employees in the new tier, while there are 51,000 retirees already receiving very costly defined benefit payments, as well as 48,000 existing employees, most of whom are in tiers with the same or similarly overgenerous plans.
Frantz is blunt “we cannot leave retirees and active employees untouched. However, that doesn’t mean drastic benefit cuts — because modest cuts over so many people will yield huge savings.”
Frantz continues “Nevertheless, that doesn’t mean union bosses will cooperate. They do not earn their living by giving up wage and benefit gains, especially for retirees. Sure, I’d invite them to the bargaining table, but I’d expect only resistance and delay. So I’d move swiftly to impose reform, in full realization that there might be a long and costly battle in court.”
A confrontation with these union bosses is virtually inevitable. Almost everyone who has looked at the SEBAC contract concludes that it will bankrupt the state, yet union bosses respond defiantly that taxes rates on the wealthy can and should be jacked up to pay the benefits.
Frantz responds “Both individuals and businesses are fleeing the state — not just because of (Gov. Dannel) Malloy’s massive tax increases, but because of the enormous future tax increases that it would take to fund SEBAC.” Bergstein doesn’t disagree. She says “Taxpayers are starting to vote with their feet.”
Frantz continues “No one believes more strongly in the sanctity of contracts than I do, but, as a Supreme Court justice once observed, ‘The Constitution is not a suicide pact.’ SEBAC is just that — a suicide pact.”
Frantz explains “The outcome of a legal battle between Connecticut and its public union bosses is uncertain. However, the outcome of doing nothing is not. It will mean stratospheric tax rates, drastic cuts in state services, and even less funding for employees benefits.”
Senator Frantz understands reality.
Ironically, Democrat Bergstein seems to as well. Unlike most in her party, she acknowledges the pension problem. Unlike the union bosses, she advocates “lower taxes on all” (including the rich). She recognizes that Connecticut has “unfunded pension liabilities, which grow every year and restricts the important investments we should be making in education and transportation” — in other words, she understand that SEBAC is crowding out critical spending.
Yet, despite seeing clearly all the big trees, she doesn’t seem to see the forest, namely that reforming SEBAC will almost certainly take a court battle, or, in other words, “ripping up contracts.”
Bergstein is offering a Pollyanna version of pension reform, confusing risk with actuality. Connecticut already has unaffordable costs. The only solution is to reduce costs. Frantz is telling the unvarnished truth that union bosses will fight reduction tooth and nail.
Experience matters. Honest realism matters. Courage to battle unions bosses matters. Offering realistic solutions rather than novelties as campaign proposals matters. Scott Frantz is the clear choice in the 36th.
Red Jahncke is the president of Townsend Group Intl, LLC, a Greenwich-based consulting firm.
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Red Jahncke is a nationally recognized columnist, who writes about politics and policy. His columns appear in numerous national publications, such as The Wall Street Journal, Bloomberg, USA Today, The Hill, Issues & Insights and National Review as well as many Connecticut newspapers.