Updated with correction.
Connecticut state law requires that whenever the amount in the budget reserve fund equals 15% of the net general fund appropriations for the current fiscal year, the excess is to be transferred to the Teachers’ Retirement Fund and/or State Employees Retirement Fund. This was incorrectly stated in a story that appeared in the Sept. 27 edition of the P&I Daily.
Connecticut Treasurer Shawn T. Wooden, sole fiduciary of the $43 billion Connecticut Retirement Plans & Trust Funds, Hartford, said he will contribute the more than $1.6 billion excess amount from the budget reserve fund to the Teachers' Retirement Fund and State Employees Retirement Fund.
Mr. Wooden plans to transfer roughly $904 million to the $21.9 billion TRF and about $720 million to the $16.2 billion SERF.
"For the second year in a row and only the second time in history, Connecticut has this opportunity to responsibly pay down our long-term unfunded pension liabilities to help put the state on a more sustainable course," Mr. Wooden said in a news release Monday.
Added Mr. Wooden: "The historic growth of the state's budget reserve fund is a direct result of smart policy and fiscal discipline that has been practiced over the last few years. Protecting and growing our budget reserve fund has led to greater liquidity, financial strength and put us in a stronger fiscal position throughout the pandemic."
State law requires that whenever the amount in the budget reserve fund equals 15% of the net general fund appropriations for the current fiscal year, the excess is to be transferred to TRF and/or SERF. After an extensive analysis, Mr. Wooden determined it was in the state's best interest to simultaneously pay down the unfunded pension obligations of both plans.
This is the second time in the state's history and the second year in a row in which the budget reserve fund has exceeded this 15% limit. In October 2020, Mr. Wooden transferred the roughly $62 million surplus from the budget reserve fund to SERF.