This study of overtime work and pay among Connecticut State Police reveals that officers nearing retirement work long hours of overtime. Since, for most state police officers, OT pay immediately before retirement is includable in earnings upon which pensions are based, this boosts pensions significantly. This behavior is called overtime spiking (OT spiking). Some officers are retiring with pensions in excess of final salary. Most state police officers engage in OT spiking, which increases significantly pension benefits for retiring officers and pension expense for the State of Connecticut.

This study of overtime work and pay in the Connecticut Department of Correction (DOC) reveals that workers nearing retirement work long hours of overtime. Since, for most Corrections workers, OT pay immediately before retirement is includable in earnings upon which pensions are based, this boosts pensions significantly. This behavior is called overtime spiking (OT spiking). Some workers are retiring with pensions in excess of final salary. Most Corrections workers hired before 2017 engage in OT spiking, which increases significantly pension benefits for retiring workers and pension expense for the State of Connecticut.

This study by Dr. Andrew Biggs, one of the nation’s leading retirement benefits experts, finds that Connecticut state employees enjoy the most generous retiree health benefits (so-called OPEB benefits) in the country, accruing future benefits each year equal to 28% of their annual wages. Annual benefit accruals in Connecticut are equal to $26,846. The national median is only 2.8%.

Moreover, Dr. Biggs found that “Connecticut employs a creative accounting strategy that results in the state reporting lower values for its long-term financial obligations.” This method provides a “misleadingly optimistic view of the state government’s long-term finances.”

This January 2024 study updates an initial study in March 2023 of the cost of the SEBAC 2022 wage agreement between Connecticut and its state employees. The General Assembly approved the agreement in the second quarter of 2022, when the Office of Fiscal Analysis (OFA) published an analyis of the cost of the four-year agreement, without including an estimate of the associated increase in the state’s future pension obligation. This study and the initial study include two sets of analyses: (1) a comparison of OFA’s estimate of non-pension costs to actual non-pension cost data 9 and 18 months later, respectively; and (2) an estimate of the impact of the wage agreement upon the state’s future pension liability which revealed an increase in future pension costs of $4.5 billion, an enormous expense not previously disclosed.

State employee compensation is an important and highly controversial public policy issue, including controversy as to the most appropriate method by which to measure it. This study analyzes state employee compensation in the fifty states. The 50-state approach establishes a level playing field, eliminating bias with respect to any individual state. All states are analyzed and compared on the same basis. 

In April 2022, the Connecticut General Assembly (CGA) approved a new wage contract which the Lamont Administration negotiated with the State Employees Bargaining Alliance Coalition (SEBAC) (the “SEBAC 2022” agreement) after the previous wage agreement expired on July 1, 2021. 

Connecticut Tax Receipts from Estimates & Finals and Pass Through Entity Tax Likely to Decline $2.1 Billion in Fiscal Year 2023

The Projected 32% Decline is Double The Official Projection of a 16% Decline.

This paper assesses the outlook for Connecticut tax receipts in fiscal 2023 (July 2022 to June 2023) from Individual Income Taxes paid via Estimates & Finals (E&F) and the Pass Through Entity tax (PET), which depend heavily upon stock market income.

Summary: This study examines the Governor’s current Three-Year Budget Report, aka Out-Year Report (“Out-Year”), which forecasts the budget in the three fiscal years (FY 2026 to FY 2028) after the budget for FY 2024 and FY 2025. The Out Year does not provide reliable guidance, given its significant methodological deficiencies. Guidance is needed, however, in the face of the state’s massive unfunded obligations of about $92 billion and the associated risk of large future tax increases.