You asked:

1. whether the state's one-third contribution to retired teachers' health insurance has been eliminated,

2. for a history of cost of living adjustments for teachers' retirement benefits,

3. for information on the Social Security government pension offset and the windfall elimination provisions and how they affect Connecticut teachers, and

4. for a brief summary of the major issues the Education Committee considered in the 2009 session.

The state budget act (PA 09-3, June Special Session, § 64) suspends General Fund contributions for retired teachers' health insurance premiums for FY 10 and FY 11.

Health insurance for retired teachers is provided (1) by the Teachers' Retirement Board (TRB) for those retirees and spouses who are participating in Medicare Part A or (2) by the retiree's last employing board of education for those that are not. The TRB plan is a Medigap plan and the local board plans are the same plans that the boards provide for their active teachers. The cost of the retired teacher coverage is shared by the state, the retirees, and active teachers, who contribute 1.25% of annual salary to help fund retiree health insurance.  The active teachers' contributions go into a separate health insurance fund under the TRB's jurisdiction called the Other Post Employment Benefits (OPEB) Teachers' Fund. The OPEB Teachers' Fund consists of total health contributions in excess of $500,000 per year by active teachers, plus investment earnings on the fund balance.  

By law, for the TRB plan, retired teachers pay one-third of the basic plan premium, the OPEB Teachers' Fund (active teachers) pays one-third, and the General Fund pays one-third.  If a retiree chooses a plan that exceeds the basic benefits, the retiree pays the difference in the premium. The basic TRB plan includes hospital, medical, major medical, and prescription drug benefits.  For retirees covered by local plans, the state pays local boards a premium subsidy of $110 per participant, per month, with the remainder of the cost generally paid by the retiree, although sometimes a local board also makes a contribution, depending on collective bargaining agreements. In most cases, the retiree pays the difference between the cost of the premium and the state subsidy. Two-thirds of the subsidy is paid from the OPEB Teacher's Fund and one-third from the General Fund. If there is not enough money in the OPEB Teachers' Fund to pay its full share, the General Fund must make up the difference.

PA 09-3, June Special Session, suspends the statutory requirement that the state General Fund pay one-third of the cost of premiums for the basic TRB plan and one-third of the cost of the state subsidy for local board of education health plans covering retired teachers. Instead, for FY 10 and FY 11, it requires the OPEB Teachers' Fund to pay two-thirds of the cost of the basic TRB plan and the full cost of the health subsidy to local boards.

According to Christina Gellman in the Office of Fiscal Analysis, the OPEB Teachers' Fund is projected to have enough money to pay the General Fund's share for retired teachers' health insurance for the next two fiscal years without increasing the cost to either the retirees or the active teachers.

By law, retired teachers are eligible for annual cost of living adjustments (COLAs) starting nine months after they retire and start receiving benefits from the Teachers' Retirement Fund (TRF). State law provides for three different mandatory COLAs. All teacher COLAs are tied to annual increases in the federal Social Security benefits and all are subject to certain limits. The COLAs to which a retired teacher is entitled depends on when the teacher retires or when he or she became a member of the Teachers' Retirement System (TRS) (CGS 10-183g (j)-(l)).

1. Teachers who retired before September 1, 1992 receive a percentage COLA equal to the Social Security COLA but not less than 3% nor more than 5%. 

2. Teachers who retired on or after September 1, 1992 also receive the Social Security COLA, up to a maximum of 6% or a maximum of 1.5% if the TRF does not earn at least an 8.5% annual return for the year.  Unlike the pre-1992 retirees, later retirees are not guaranteed any minimum COLA. 

3. Teachers who become members of the TRS on or after July 1, 2007 will, when they retire, receive a COLA equal to the Social Security COLA with limits related the TRF's investment performance for the past year. If the fund earns less than 8.5%, the maximum COLA is 1%; if it earns between 8.5% and 11.5%, the maximum is 3%; and if it earns more than 11.5%, the maximum COLA is 5%.

The Social Security COLA for 2010 has not been officially announced.  However, the Social Security Administration estimates that the COLA will be zero because there has been no increase in the Consumer Price Index.  The Social Security COLA estimates for the next three years can be found here:  http://www.socialsecurity.gov/cgi-bin/bri.cgi.  If the 2010 Social Security COLA is zero, then teachers who retired on or after January 1, 1992 will also receive a 2010 COLA of zero  while pre-1992 retirees will receive a 3% COLA. 

For your further information, we attach a table showing annual TRS COLAs since 1993. (Attachment 1)

Public school teachers in Connecticut are not covered by Social Security for their public school teaching service. Teachers and school districts make no contributions to the Social Security system for that work and teachers cannot collect benefits based on it. Instead, the state provides teachers with retirement benefits through the TRS.

On the other hand, teachers who are state employees and who are members of the State Employees Retirement System, such as those at the state's vocational-technical schools, are covered by Social Security as are most state employees. (Some state employees remain in the TRS if they started their careers as public school teachers in local school districts.) In addition, teachers often have other employment in which they are or were covered by Social Security and they may be entitled to Social Security benefits based on that covered employment. When considering whether a teacher is entitled to Social Security, it is important to keep in mind who their employer is or was and whether their position is covered by the TRS.

When Congress passed the Social Security Act in 1935, it excluded federal, state, and local government employees from mandatory coverage. The exclusion for state and local public employees was based on constitutional concerns about whether the federal government could impose taxes on state governments. In the early 1950s, Congress passed a law that allowed state and local government employees to be covered if they voluntarily chose coverage in a referendum. The then-members of the Teachers' Retirement System voted against joining the Social Security system. In 1959, at the request of the Connecticut Education Association, the General Assembly prohibited TRS members from holding another referendum (CGS § 5-158(d)). The ban on Social Security coverage for Connecticut teachers remains in place.

Retired teachers receiving TRS pensions may be eligible for Social Security (1) if they have enough other work covered by Social Security to qualify or (2) through a spouse's work. But in such cases, their Social

Security benefits are reduced because of their TRS pensions. The spousal benefit reduction is called the “government pension offset” and the reduction in benefits for other work is called the “windfall elimination provision.”

These benefit reductions are required by federal law and the General Assembly has no authority to change them. They are designed to keep the Social Security system from paying people benefits that are higher than their financial circumstances warrant because most of their earnings are outside the Social Security system.

Government Pension Offset (GPO). The GPO reduces Social Security spousal benefits by two-thirds of the monthly benefit from any government pension the spouse receives for work not covered by Social Security. Even if a spouse takes her government pension in a lump sum, Social Security will nevertheless calculate a monthly benefit amount and use it to offset her Social Security spousal benefit. If the government pension is high enough, it can offset the entire Social Security benefit.

For example, suppose a teacher receives a $1,000-per-month TRS pension benefit and is also eligible for $600 per month in Social Security spousal benefits based on her husband's employment. Under the GPO requirement, the pension offset amount is $660 (two-thirds of $1,000) per month. Since the offset is greater than the Social Security spousal benefit, the teacher receives no Social Security.

The GPO equalizes public and private sector workers for purposes of collecting spousal benefits. The Social Security law has always required that a person's benefit as a spouse, widow, or widower be offset dollar-for-dollar by the benefits he or she earns from his or her own work. Thus, for example, a woman who earns an $800 per month Social Security benefit based on her own earnings cannot also collect a $500 per month spousal benefit based on her husband's Social Security record. But before the GPO was passed, a woman who received a pension for work in a government job not covered by Social Security could collect both the pension and a full Social Security spousal benefit because her government earnings and pension did not show on Social Security's records.

Congress enacted the GPO in 1977. It applies to anyone who qualifies for a TRS pension on or after December 1, 1982.

Windfall Elimination Provision (WEP). The WEP modifies the formula used to figure Social Security benefits for someone who has earned a pension from noncovered employment and also qualified for Social Security based on a brief work history in covered positions. Social Security's benefit formula redistributes benefits so lower-paid workers get a higher return from the system than better-paid workers. It does so by replacing a higher proportion of a low-paid worker's pre-retirement earnings. Low-paid workers receive a benefit that replaces about 55% of pre-retirement pay while a higher-paid worker's benefit replaces only about 25%. Because wages from noncovered employment do not show on Social Security's records, before the WEP was established, workers entitled to state and local government pensions from noncovered employment appeared to be low-paid and their Social Security benefit was calculated on the subsidized basis, giving them an undeserved “windfall.”

In 1983, Congress passed the WEP, which modifies the benefit formula for those with government pensions from noncovered employment. Instead of replacing 90% of the first $656 of the person's normal wages, 32% of the next $3,995, and 15% of the remainder, which is the usual formula, the windfall provision replaces only 40% of the first $656, thus reducing the overall benefit.

For example, a worker not receiving a TRS pension whose average covered earnings were $2,000 per month would be eligible for a Social Security benefit of $1,030 compared to a Social Security benefit of $712 per month for a TRS member with the same covered earnings. (These Social Security amounts apply for a worker who turned age 66 in 2006. They are adjusted annually.)

There are several exceptions to these rules, including one for people who have at least 30 years of “substantial earnings” in a covered job. In addition, the Social Security WEP reduction cannot be more than 50% of any pension benefits attributable to uncovered earnings after 1956.

The windfall provision applies to TRS members who become eligible for a pension on or after January 1, 1986. Because of a four-year phase-in, the full effect applies to those who become eligible for TRS pensions after December 30, 1989. The Social Security Administration provides an online calculator that allows those with pensions from noncovered work to calculate the WEP's effect on their Social Security benefit.

Because of the state's budget crisis, the Education Committee faced the major issue of funding levels and distribution requirements for state education grants to local school districts and towns. The largest such grant is the Education Cost Sharing (ECS) grant, but the committee, along with the Appropriations Committee, also addressed state grants for high-cost special education services and placements, school construction projects, school transportation, adult education, health services for private school students; grants for priority school districts, summer school and after-school programs, and school readiness; and state funding for charter and interdistrict magnet schools, as well as for vocational-technical schools.

Although the Education Committee reported a bill to the Appropriations Committee that would have increased appropriations several of these grants, including ECS, the final budget kept most education grants frozen at FY 09 levels for the next two fiscal years, although the grant to towns to help fund high-cost special education students was reduced by 10%.

Teacher certification and training for beginning teachers was a major Education Committee focus in 2009.

The committee's teacher certification bill, which became PA 09-1, June 19 Special Session, makes several changes in teacher training, qualifications, and professional development. It establishes new teaching certificates and permits and creates waivers from Connecticut's teacher testing requirements to allow teachers from other states or those whose qualifications do not coincide with Connecticut's existing teacher training requirements to teach in public schools. It requires local school boards to take the State Board of Education's (SBE) priorities into consideration when determining professional development activities for certified employees. Another provision eliminated the education commissioner's authority to waive a requirement that substitute teachers hold at least a bachelor's degree. This provision was later modified to allow substitute teachers who do not hold a bachelor's degree to teach during the 2009-10 school year, but only in assignments lasting 10 or fewer school days.

The act also (1) adds to the crimes requiring automatic revocation or denial of teaching credentials; (2) requires student teachers to undergo the same criminal background checks as other school personnel; (3) requires school districts to notify the education commissioner when they dismiss a person with a teaching credential for moral misconduct; and (4) bars anyone whose teaching credential is revoked from working in any public school in any capacity while the revocation remains in force.

The committee also enacted legislation establishing a new teacher education and mentoring (TEAM) program for beginning teachers to start July 1, 2010. The program must be aligned with teaching principles approved by the SBE, include guided teacher support and coaching by teacher mentors, and require beginning teachers to complete five learning modules to help them develop particular teaching skills. Local and regional school districts, regional educational service centers (RESCs), unions representing certified employees, and public colleges and universities must cooperate with the State Department of Education in developing and administering the program, recruiting and training mentor teachers, and evaluating and assessing beginning teachers.

The new program replaces the beginning educator support and training (BEST) Program, which was eliminated as of July 1, 2009.

Another major Education Committee issue in 2009 was state support for interdistrict magnet schools and for programs to address the Sheff v. O'Neill desegregation order.

The legislature ended up enacting increases in per-pupil operating and transportation grants for Sheff magnet schools run by the Hartford Board of Education and by the Capitol Region Education Council (CREC) and other third parties. Grants for magnet schools in other parts of the state (non-Sheff magnet schools) were generally kept at FY 09 levels for the next two fiscal years as scheduled increases in those grants were eliminated.

The committee and the legislature also limited magnet school operating budgets, required magnet school operators to notify students' home districts when students enroll directly in a magnet school, and allowed Sheff magnet schools to operate without participation agreements with other districts. Finally, the committee and the legislature agreed to place a moratorium on state construction and operating grants for new interdistrict magnet schools that do not help the state meet the Sheff order. The moratorium continues until the education commissioner develops a comprehensive statewide magnet school plan, which he must submit to the Education Committee by January 1, 2011.

The committee reported a bill, based on a recommendation from the SBE, to increase the number of credits required to graduate from high school from 20 to 25 and to require students to take additional credits in math, science, and world languages. The new requirements were to take effect originally with the Class of 2016. This was later changed to the Class of 2018, but although the changes passed the Senate, they were rejected by the House.

The committee, with the Appropriations Committee, revamped and simplified the way the state administers its early childhood education program. It created a new Office of Early Childhood Planning within the SDE, required enhanced tracking of students through the Early Childhood Information System, and reconstituted the Early Childhood Cabinet with different membership and duties.

The committee also considered but did not act on proposals to modify the minimum staff qualifications for school readiness programs starting in FY 15.

The committee and the legislature made permanent the temporary formula, first used in FY 09, for distributing school readiness funds to priority school districts; allowed towns to increase the share of their school readiness grants used for administration, program evaluation, and coordination to a maximum of $75,000 instead of $50,000; and froze the maximum per-child cost of the school readiness program at the FY 09 level of $8,346.

The Education Committee again devoted attention to the in-school suspension requirement first passed in 2007 and set to go into effect on July 1, 2009. Additional proposals to deal with truancy and high school dropouts also came before the committee. The only legislation to pass in the regular session was an act requiring school districts to include truancy measures in annual strategic school profiles. But in the recently passed education budget implementation act, the legislature delayed implementation of the in-school suspension law for another year, until July 1, 2010 and, starting July 1, 2011, barred students from dropping out of high school at age 16 even with parental consent. The new law requires students who have not graduated from high school to remain enrolled until they turn 17. At that age, they may quit, but only with their parent's consent.

The Education Committee and the General Assembly approved

$398.5 million in state grant commitments for school construction projects as well as a grant program to reimburse school districts for any short-term borrowing costs they incurred to cover school construction grant payments that were delayed because state school construction bond funds were unavailable during August and part of September.

The committee and the legislature also passed a new law that requires school boards to procure and properly use environmentally preferable cleaning products in their schools by July 1, 2011. These products must (1) meet guidelines or standards set by a national or international certification program the Department of Administrative Services approves in consultation with the environmental protection commissioner and (2) as far as possible, minimize potential harmful effects on human health and the environment.

The state's fiscal crisis led the committee and the General Assembly to confront the temporary closure of J.M. Wright Technical High School in Stamford. After the legislature rejected proposals that proponents said would keep the school open, including a so-called “middle college” plan that would have combined vocational-technical school and community college programs, the SBE decided to suspend the programs at Wright Tech for the next two years. The state budget act (PA 09-3, June Special Session) includes a per-pupil reimbursement of $2,500 for students who previously attended Wright Tech to be bused to Henry Abbot Technical High School in Danbury.

The Education Committee considered a proposal to implement a federal law giving a child placed under the temporary or permanent Department of Children and Families (DCF) custody the right to continue to attend the school he or she attended before being placed in DCF custody, unless it is in not the child's best interests. The bill would have made DCF responsible for transporting children to their previous school. Because of the bill's fiscal implications and the fact that the federal requirement does not take effect until July 1, 2010, the committee decided to defer this issue to the 2010 legislative session.

JL:ts

Source: Teachers' Retirement Board