Board of Ed Votes to Fund Pensions at 100 Percent

After hearing a presentation from Selectman Howard Lasser regarding the implications of a fully funded pension fund and related topics, the Board of Education (BOE) voted 5-0 to approve a resolution that hopefully will demonstrate to bond rating agencies that the town is being “fiscally prudent” in managing its money.

The BOE had at its June 15 and July 6 meetings, as some members expressed concern that if the pension fund exceeds 100 percent it might give collective bargaining units rights to negotiate for that money.

Part of the resolution stated, “The Boards are committed to maintaining a full funded pension fund to meet negotiated pension obligations.”

Lasser, who is a member of the municipal Retirement Benefits Advisory Committee (RBAC) that was formed last year, said most of Danbury’s pension funds are over 100 percent and there “doesn’t seem to be a problem for them in negotiating with their bargaining units.”

He told the BOE at its meeting Wednesday that there are several “variables” in determining the level of funding for the pensions, which cover municipal employees and non-certified school district workers.

Lasser said, for example that Danbury uses an 8.5 percent rate of return to its pensions while Brookfield has a “very conservative” 6.5 percent rate.

He said if Brookfield used Danbury’s rate of return, its pension fund would probably be 90 to 95 percent funded instead of being at 85 percent.

Lasser, who has worked in financial oversight positions in private industry for decades, said that “there is no crisis” in the level of funding for the pension fund, since it is doing well in comparison to the state and other municipalities.

The Board of Selectmen (BOS) and Board of Finance (BOF) have both approved the resolution regarding the pension fund and members of those boards have indicated that the town and the school district should continue to steadily increase their levels of contributions to ensure that the pension account becomes fully funded.

BOE Chairman Ray DiStephan has said the school district made a considerable increase in its contribution this year and plans to continue to do so during the next fiscal year.

“We want the financial community to know that we are being prudent financial managers,” Lasser said regarding the need to increase funding and approve the resolution.

He said when the town seeks to borrow money again, which would likely happen in 2014 or 2015, it wants to demonstrate to the ratings agencies that “we have a policy in place and we’re steadily improving and being fiscally prudent.”

In response to a question from Superintendent Anthony Bivona, Lasser said the RBAC will probably be able to provide feedback by November on how much money the BOE should be contributing to the pension fund during the next fiscal year. Bivona said that would be helpful since the school district starts formulating its proposed budget in October.