Office of the State Comptroller - Nancy Wyman

2001 Comptroller's Report on  Connecticut's Economic Health

Priorities for Connecticut's Future

STRENGTHENING THE FISCAL FOUNDATION OF CONNECTICUT AND ITS MUNICIPALITIES 

Protecting the financial stability of Connecticut and the assets of its taxpayers has been Comptroller Wyman's main focus since she took office in 1995. That goal led her to propose a bill in the 2001 General Assembly session that would help guard against state and local tax increases during an economic slowdown. 

The Comptroller's bill would dramatically increase the amount of surplus money that is deposited each year in the state's emergency Rainy Day Fund. It also would distribute all interest earned by the fund to every city and town in Connecticut. 

By increasing the state's emergency reserves and providing more financial support to local governments, the Comptroller's plan safeguards the long-term fiscal stability of Connecticut and its municipalities. The plan also reduces the prospect that an economic slowdown will force hikes in state and local taxes. 

If approved, the bill would: 

The Comptroller has recommended that cities and towns use the grant funds to increase their local emergency reserve fund balances, or for other fiscal priorities that could prevent or lessen potential tax increases. 

Increasing the state's Rainy Day Fund balance addresses several other fiscal imperatives. 

First, an increase in the state's emergency reserves will be viewed as a positive step by bond rating agencies. That may help the state continue to obtain favorable borrowing rates on its debt, thus saving taxpayer dollars.

Second, an independent study indicates that Connecticut's current financial reserves are 15 to 20 percent below the level that would be required to endure a two-year recession without large tax increases or reductions in basic state services. 

Connecticut's own past experience confirms this finding. In the 1987 fiscal year, the state's Rainy Day Fund was full. But within a subsequent five-year period that included a recession, the emergency fund was drained and the state was forced to raise taxes and borrow $965.7 million to meet its budget. 

Finally, placing a large portion of the surplus in the Rainy Day Fund will ensure that the state does not use the surplus money to make expenditure and revenue commitments that cannot be sustained over time.

Comptroller Wyman has submitted to the General Assembly detailed legislation to implement this proposal. The Fiscal Year 2001 surplus presents a unique opportunity to improve the long-term fiscal condition of state and local government. The Comptroller's proposal ensures that long-term stability is not sacrificed to higher levels of short-term spending.

UPGRADING THE STATE'S CORE FINANCIAL AND ADMINISTRATIVE COMPUTER SYSTEMS 

Comptroller Wyman is spearheading a major effort to modernize Connecticut state government's core financial and administrative computer systems. The project, named Core-CT, encompasses central and agency accounting, accounts payable, payroll, time and attendance, worker's compensation, personnel, and other systems that run the state's day-to-day functions. 

For years, the existing core systems have been plagued by poor integration, redundant data entry, and time-wasting reconciliation. They are written in a number of different programming languages, reside on many platforms, and include numerous databases. 

Based on older technology, these systems are difficult to modify and have not kept pace with changing public and state agency needs. When complete, the new system and associated business process changes will make many transactions simpler, allow easier reporting by users, and build a foundation for e-government. 

The new systems also will allow government for the first time to track every tax dollar that is spent. That information will allow policymakers to determine which state programs are working and which are not, and to make targeted spending cuts instead of across-the-board reductions. 

The state's central administrative agencies - the Office of the State Comptroller, the Departments of Administrative Services (DAS) and Information Technology (DOIT), and the Office of Policy and Management (OPM) - have joined together to undertake the transition to this new, integrated system encompassing virtually all major executive-branch state agencies. 

The project is expected to take three years to complete and to cost about $75 million. 

Comptroller Wyman, DAS Commissioner Barbara Waters, Chief Information Officer Gregg "Rock" Regan, and OPM Secretary Marc Ryan, form the project's bipartisan decision-making Steering Committee. 

More information on the project can be found on the Internet web site: www.Core-Ct.State.Ct.Us/

IMPROVING THE STATE'S MUNICIPAL EMPLOYEES' RETIREMENT SYSTEM 

This 2001 legislative initiative by the Comptroller would expand the existing Municipal Employees Retirement System (MERS) that provides for various benefits enhancements for retired municipal employees, as well as widows and dependent children of deceased firemen and policemen. 

Benefit levels in MERS have remained relatively unchanged since its inception in 1957. Due to the current sound financial position of the MERS program, the Comptroller believes it is appropriate to consider improving the level of benefits to make them comparable to other public retirement plans. 

The Comptroller's proposal would: 

Currently, there are approximately 90 beneficiaries of certain policemen and firemen participating in the program. The Policemen and Firemen Survivor's Benefit Fund is overfunded and monthly benefits for widows of policemen and firemen and their dependents have not increased since the 1960s. 

The proposed increase in monthly benefits for the Policemen and Firemen Survivors Benefit Fund will have no fiscal impact on the state because the fund is supported by the participating municipalities and the fund's members.

EXPANDING THE STATE'S MUNICIPAL EMPLOYEES HEALTH INSURANCE PROGRAM 

Public Act 96-234 created the Municipal Employees Health Insurance Program (MEHIP) for the purpose of making affordable managed health insurance coverage available to all municipal employers. 

MEHIP is a voluntary program that allows each employee to select from four of the health plans offered to State employees: Anthem Blue Cross and Blue Shield of Connecticut, ConnectiCare, MedSpan, and Physicians Health Services. MEHIP has been offered to municipal groups since 1998. Since that time, eligibility has been extended to Community Action Agencies, fire districts and transit districts. 

In the 2001 General Assembly session, the Comptroller submitted a bill that would extend eligibility for the program to not-for-profit organizations. The purpose of the initiative is to offer affordable quality health care coverage to non-profit organizations that are designated 501(c)(3) by the Internal Revenue Service.

A number of studies indicate that those not-for-profit businesses are typically small in size and are unable to offer insurance to its employees. Because these businesses cannot spread risk and administrative costs over a large number of workers, they have relatively little bargaining power with insurers. Therefore, these businesses are likely to pay higher premiums and experience steeper rate increases. Also, if a non-profit is able to offer coverage, the low wage earners that they typically employ often cannot afford the high cost of the premiums and so remain uninsured. 

There would be minimal fiscal impact on the state from this program because most of the administrative costs are borne by the program's participants.