Gov. Dannel Malloy and Comptroller Kevin Lembo on Thursday announced a reduction of roughly $13.3 billion in Connecticut’s future unfunded state employee and retiree health care liabilities, according to a finalized actuarial report.
The final updated report on other post-employment benefits, prepared by Segal Co. of Farmington, Conn., reduces the state’s projected unfunded actuarial accrued liability from $31.2 billion, as of June 30, 2011, to $17.9 billion — down $13.3 billion from the expected level for this year’s valuation.
State officials cited several collaborative health care cost control initiatives implemented across state government over the last few years, including changes related to the agreement with the State Employees Bargaining Agent Coalition and initiatives by Lembo’s office and the Health Care Cost Containment Committee.
“By planning for the long term, we can make sure that future generations won’t find themselves in a situation where they have to choose between critically important services and obligations to state employees,” Malloy said in a statement.
The report indicates that several recent health care changes and initiatives — implemented following the last OPEB actuarial report in 2008 — are responsible for the future cost reduction, including changes to the state’s health care plan design, administration, and funding of the state employee and retiree health care plan.
Moody’s Investors Service in January pointed to budgetary and pension shortfalls, and depleted reserves, when it lowered the state’s general obligation bond rating to Aa3 from Aa2.
“Connecticut’s combined fixed costs for debt service, pension, and [OPEB] are already high and, absent significant further reforms, will continue to consume an increasingly larger portion of the state’s budget,” Moody’s said in a report.
Standard & Poor’s, Fitch Ratings and Kroll Bond Rating Agency Inc. all assign a AA to the state.