April

ADVOCATING

APRIL 2018 CEA ADVISOR 5

TEACHERS, CEA LEADERS TO LEGISLATORS: ROLL BACK THE TEACHER TAX

CEA is fighting back on an increased pension contribution for teachers that is causing financial hardship for CEA members. Passed by legislators last year without so much as a public hearing, the payroll tax increase—combined with increases in healthcare costs, furlough days, and little or no wage increases—means that many Connecticut teachers are taking home less pay this year. In a March 16 public hearing on whether to repeal the increase in the teacher payroll tax, CEA Executive Director Donald Williams told the legislature’s Finance Committee that “teachers were singled out for the largest per capita tax increase—an average of about $700 per teacher. The dollars collected by the state were not used to offset the state’s unfunded liability in the Teachers’ Retirement Fund, but rather were used to reduce the state’s contribution to the fund.” The payroll tax increase from 6 percent to 7 percent is not a one- percent increase but a 16.6-percent increase in what teachers are required to pay. In fact, our teachers pay just as much as other teachers across the U.S. when you consider that salaries are higher here because of the significantly higher cost of

living. A 6-percent contribution by a Connecticut teacher is comparable to an 11-percent contribution by a teacher in Texas or 10 percent by a teacher in Maine or Louisiana. Teachers do not participate in Social Security and are dependent on their retirement fund. Over the years, teachers have always paid their fair share into the teacher retirement plan, but the state has not fully funded or paid its share—creating an unfunded liability that jeopardizes the solvency of the fund. “Teachers have been paying more than their fair share for decades. They have paid 6 percent of their salary since 1993—a much greater share toward their pension than in many other states for that length of time,” Williams said. He urged legislators to pass HB 5430, rolling back the unfair increase in the teacher payroll tax. More than 450 CEA teachers submitted testimony urging the same. Teachers James Tierinni (Manchester) and Matt Macaluso (Somers) were able to attend the hearing and testify in person. “Teachers are middle-class employees, and this is a huge tax on middle-class families,” Tierinni said. He added that many teachers in his

Manchester teacher James Tierinni told legislators that many of his colleagues work second jobs to make ends meet.

school are already working a second job just to make ends meet. Macaluso said that his additional $800 contribution equals the cost of a month of groceries for his family of four. “The Connecticut legislature broke the piggy bank in the form of years of underfunding the Teachers’ Retirement Fund,” he said. “Now teachers are expected to glue it back together.” “The state’s budget woes should not fall squarely on the backs of public school educators, nor should

teachers be penalized for the state’s mistakes,” Williams asserted. “There is a better, fairer way to address the state’s unfunded liability for teacher retirement. It is not to unfairly tax teachers more but rather to meet the state’s obligation in a way discussed by the Teachers’ Retirement Viability Commission—placing the State Lottery into the retirement fund, or finding other sustainable revenue streams to ensure the fund is solvent for decades to come.”

PAYROLL TAX HITTING TEACHERS HARD Some of the stories of hardship teachers have shared include the following: • You have literally removed $1,800 from my yearly household operating budget (we are a two-teacher family). With rising costs for all things, and especially high-deductible healthcare costs, this constitutes a big hit. • When districts cannot afford classroom books, teachers buy them. When district budgets cannot cover the cost of art supplies, teachers buy them. When kids come to school hungry, teachers provide snacks and food. When kids come to school without coats, teachers buy them. We support kids because we care. It would be wonderful if our state appreciated all that we do and supported us the same way. • I have already suffered through years of increased insurance costs and 0% to 1% raises. I have been treading water for years, financially; this unfair tax should be repealed. • I still don’t have enough money to properly rent or own a place of my own while maintaining loan payments, paying bills, and buying food to eat. I buy notebooks and pencils for my class out of my own pocket. I buy books for my students to promote literacy—books on their level that will also spark their interest—again, out of my own pocket. • The increase in the teacher payroll tax more than offsets any raise we get, and coupled with our increasing share of health insurance, we are going backwards. • My paycheck leaves no extra for my children’s college savings.

The Lottery and the Teachers’ Retirement System: A Win-Win for Teachers and the State

The Teachers’ Retirement Viability Commission, created by the legislature last year, determined that placing the Connecticut Lottery into the Teachers’ Retirement Fund in 2019 would result in an immediate reduction in the state’s unfunded liability. Furthermore, the Teachers’ Retirement System assets would benefit by a stable source of significant income. “If structured correctly,” said CEA’s Donald Williams, “this transfer would utilize a public asset for a public purpose, significantly pay down the state’s unfunded pension liability, and as a result, reduce the state’s yearly financial obligation.” In Canada, says Williams, Ottawa provides a useful model for this—using their lottery for a public purpose and retaining it as a public asset. The Connecticut Lottery is valued at approximately $5 billion. Placing the lottery into the Teachers’ Retirement Fund would result in an increase in the fund’s value by $5 billion, going from about 56% funded to more than 70% funded. This would dramatically reduce the state’s unfunded liability—and the state’s yearly payment, since there would be less unfunded liability to pay off—and result in greater predictability and stability for the state and greater retirement security for teachers.

CEA is pushing hard for this plan, and so should you. Details on how this plan would work are at cea.org/lotterypensions .

CEA Executive Director Donald Williams urges lawmakers to roll back the teacher tax.