Health Insurance Premium Account Facts (HIPA)
1989 – 1990 – Insurance costs – 75% paid by HIPA and 25% paid by State, no cost to retiree (Cost $86)
1996 – Solvency of Health Plan in trouble (Due to increased insurance costs and more retirees)
2000 – 25% of insurance costs shifted to the retiree
2003 – Active teacher contributions to HIPA increased to 1.25% from 1%
2004 – Shared contributions of one-third each from State/HIPA/Retiree
2010 –11 No one-third contribution from State to HIPA
2012 – Full Contribution but used Medicare reimbursements to fund HIPA. State passed a statute allowing State to use Medicare reimbursements toward its promised contributions.
2013-14 State’s contribution reduced from one-third to one-fourth. Medicare reimbursements used as part of the State’s contribution, reducing the State’s contribution to approximately one-eighth. HIPA fund makes up the difference, resulting in no premium increases for retirees, but a significant draw down of HIPA funds
2015–18 State contribution considerably lower than the promised one-third.
2020 – While teachers continue to contribute, according to the Insurance Consultant to the TRB, the Health Care Fund will be insolvent unless the State contributes its full share.
Teachers’ Retirement System (TRS) Facts
Connecticut’s Teachers’ Retirement System (TRS) is a “defined benefit plan” administered by the Teachers’ Retirement Board. Upon retirement, an eligible teacher participating in TRS will receive a fixed pension benefit that is determined by the number of years the individual taught in Connecticut public schools and the individual’s final average salary.
Since 1939, TRS has provided retirement benefits to its members. However, for much of the system’s history, the State did not properly save for the retirement benefits promised to teachers. As a result of not adequately contributing, and the following factors, TRS has accumulated more than $13.1 billion in unfunded liabilities.
- Years of No State Contributions Prior to 1979, retirement benefits earned by TRS members were completely unfunded by the State. While participating teachers made contributions from their paychecks (and currently contribute 7 percent of their annual salaries), the State did not begin pre-funding TRS until 1982. The impact of years of no State contributions to TRS is still being felt.
- State Contributions Often Fell Short Once the State did begin making contributions to TRS, it often did not make its full annually required contribution (ARC). Not only did the State fall short of contributing its scheduled payments multiple times, it failed to make its full ARC until 2008. While the State has made its full ARC every year since 2008, as required according to the pension obligation bonds, the Fund remains unfunded.by 13 billion dollars.
- Assumed Returns Have Been Overly Optimistic in Recent Years TRS’ unfunded liability has also increased over the years as a result of investments made with TRS pension funds failing to meet their assumed rates of return. As a result of these return shortfalls, TRS’ unfunded liabilities have increased by billions of dollars.
Information source: Connecticut’s Finances, An initiative of the Connecticut Finance Project, ctstatefinance.org