After defining its charge, Task Force members concluded that the data-gathering portion of its work would be crucial. It would be critical to start the project with a thorough knowledge of the existing practices of the retirement systems and develop recommendations based on the empirical data. It was agreed that the best way to achieve this goal would be through a statewide survey of all Connecticut municipalities who sponsored retirement plans for their employees.
The survey was largely based on one prepared by the Public Pension Coordinating Council , with modifications made by Milliman & Robertson, members of the Task Force, and staff. It was divided into the following five sections:
I - Introduction
II - Plan Benefits
III - Actuarial Analysis
IV - Plan Funding and Contributions
V - Investment Information.
The survey was mailed to the Chief Financial Officers of Connecticut municipalities who were asked to complete one survey for each plan sponsored by the municipality or tax district. The level of response was significantly higher than had been anticipated. The information gleaned from the survey responses was used by Milliman and Robertson to create a database.
The Task Force conducted a public hearing on innovative and fiscally sound practices used to mitigate unfunded pension liabilities. The public hearing was well attended, and provided Task Force members with the opportunity to hear testimony from various bond counsel, investment bankers, financial advisors, and the Treasurer of the State of Connecticut, the Honorable Christopher Burnham.
Although it sought “innovative practices”, the public hearing mainly provided the Task Force with information regarding the issuance of pension obligation bonds. The consensus of those testifying seemed to be that clear statutory authority to issue pension obligation bonds in Connecticut does not presently exist; the Task Force should consider offering Connecticut municipalities the opportunity to use this funding mechanism as an option, but only under certain conditions.
After reviewing the testimony, Task Force members agreed that it would be beneficial to understand the positions of the rating agencies on the issuance of these bonds. They also sought the investors’ perspective on the issuance of pension related debt. The facts gathered at the public hearing and the subsequent meetings with rating agencies and investors form the basis of the Task Force’s findings and recommendations in this area.
The Task Force made a presentation to the Connecticut Government Finance Officers Association (GFOA) of its preliminary findings. This generated more interest in the work of the Task Force.
In addition to gathering information through the methods mentioned above, Task Force members were also provided with a large amount of reading material on the management of public sector retirement systems. The topic of Pension Obligation Bonds is very much in the news, as different states are investigating this option as a possible solution to their funding problems. Members were provided with many articles pertaining to this issue.
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