Editorial / A step toward sanity in town-employee pensions
Even before the town of Westport's new municipal finance team is completely in place, more evidence of a new conservatism with the taxpayers' buck was evident this week.
Without trumpets or flourishes -- and more significantly, without so much as a hint of opposition -- the boards that oversee two non-union employee pension plans closed those plans to new hires.
The two pension plans cover 91 current employees of the town, the school board and the Westport Public Library. While Wednesday's unanimous votes will not change the pensions of those 91 employees, the votes are quite significant steps toward curbing runaway benefits costs and bringing the retirement plans of future town employees more in line with private-sector benefits.
The changes come in the wake of last fall's staggering discovery that the town faced massive liabilities in the funding of its retiree benefits.
While the cause of those liabilities was a gross under-counting of retirees by an actuarial firm hired by the town, the shortfall cast a cold hard light on what those who administer benefits plans and billions of private-sector workers had long known -- that the public sector was the last bastion of defined-benefit pension plans.
This week's votes by the pension boards underscored the new fiscal conservatism of the town's Board of Finance, now controlled by Republicans. That conservatism was born of November's town election and is personified by the board's new chairman, Avi Kaner.
The pension board votes also illustrated a solidarity -- at least on this issue -- of Democratic First Selectman Gordon Joseloff and the GOP-controlled finance board.
Republicans scored major victories in November. And while Joseloff was not on the ballot, many in the GOP ranks billed the election as a referendum on his administration and the financial mess in which the town suddenly had found itself.
The Representative Town Meeting must approve the pension boards' actions before benefits changes for new hires in the two employee groups can take effect. But new hires are certain to get not pensions that would guarantee a monthly check for a certain amount but rather retirement savings plans similar to the 401(k) plans that millions of private-sector employees have.
Westport is hardly alone among public-sector entities taking the step. Many Connecticut communities, including neighboring Fairfield, have begun converting new hires from defined-benefit plans to 401(k)-like instruments.
But the public sector is at least a full decade late to the party. Private-sector employers began to realize 20 years ago that pension costs were like runaway trains, and they quickly began to throttle back.
The town, of course, must honor its pension agreements with existing workers. And the changes effected this week are only the tip of the town-employee iceberg -- non-union employees.
Benefits are crucial elements of union contracts, so any proposal to make similar changes to retirement benefits of new hires in unionized positions would have to be part of the collective-bargaining process.
One need look no farther back than last summer's negotiations between Gov. Malloy and the state-employee unions to recall how volatile the concept of union givebacks can be. The state unions finally backed down in the face of the alternative -- massive layoffs.
Westport's finances, while not exactly glowing, are appreciably better than Malloy faced in trying to draft a budget last June and July.
Even if the municipal-employee unions buy in to changes for new hires, the old defined-benefit pension plans would remain with us for a generation or more -- until the last beneficiaries die off.
Still, the action taken this week was a solid and necessary start toward reforming the municipal pension system.
One man who will have a say in that reform could well be the next person to join the municipal payroll. Gary Conrad, currently the town of New Canaan's chief financial officer, will become Westport's finance director next month.
His own retirement benefits will be a subject for negotiation in his employment contract.