presentation prepared for the appropriations committee and the finance, revenue, and bonding...
TRANSCRIPT
FISCAL ACCOUNTABILITYFISCAL ACCOUNTABILITYOF STATE GOVERNMENTOF STATE GOVERNMENT
Presentation Prepared for the Appropriations Committee and
the Finance, Revenue, and Bonding Committeeby the Office of Policy and Management
November 27, 2006
2
ECONOMIC AND ECONOMIC AND DEMOGRAPHIC TRENDSDEMOGRAPHIC TRENDS
“One of the greatest pieces of economic wisdom is to know what you do not know.”
- John Kenneth Galbraith
3
ECONOMIC INDICATORS
Fiscal Fiscal Fiscal Fiscal Fiscal 2005- 06 2006- 07 2007- 08 2008- 09 2009- 10
UNITED STATES
Gross Domestic Product 6.7% 6.2% 5.6% 5.3% 5.2%
Real Gross Domestic Product 3.4% 2.9% 3.0% 3.0% 3.1%
G.D.P. Deflator 3.1% 3.2% 2.6% 2.2% 2.0%
Housing Starts 1.0% - 18.4% - 2.8% 1.3% 0.7%
Unemployment Rate 4.8% 4.8% 4.9% 4.7% 4.5%
New Vehicle Sales (M) 16.64 16.29 15.97 16.00 16.15
Consumer Price Index 3.8% 2.9% 2.2% 2.1% 2.1%
CONNECTICUT
Personal Income 5.6% 5.7% 5.1% 4.7% 4.7%
Nonagricultural Employment 0.7% 0.5% 0.9% 0.7% 0.7%
Unemployment Rate 4.6% 3.8% 3.9% 3.7% 3.7%
Housing Starts - 5.5% - 17.7% 6.7% 4.6% - 0.3%
M denotes millions.
ASSUMPTIONS USED TO DEVELOP REVENUE ESTIMATES
4
SIGNIFICANT DEMOGRAPHIC TRENDS
Projections of The Population in Connecticut(Mid-Year Resident Population In Thousands)
1990 2000 % ChangeAge Group Census Census 2010 2020 2030 2000- 2030
Total 3,287.1 3,405.6 3,577.5 3,675.7 3,688.6 8.3%
0- 17 737.6 841.7 814.0 816.3 823.4 - 2.2%
18- 44 1,452.3 1,304.3 1,257.5 1,258.5 1,217.9 - 6.6%
45- 64 651.3 789.4 990.4 958.2 852.9 8.0%
65 and Over 445.9 470.2 515.6 642.5 794.4 68.9%
85 and Over 47.1 64.3 93.7 105.6 132.4 105.9%
Median Age 34.4 37.4 39.6 39.7 41.1 9.9%
Projections
5
DEMOGRAPHIC TRENDS
Workers Per Person Under 18 Years of Age (Workers Aged 18 to 64 Years)
2.5 2.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000 Census 2030 Proj.
Year
Wo
rker
s S
up
po
rtin
g O
ne
Ch
ild
Workers Per Person Over 64 Years of Age (Workers Aged 18 to 64 Years)
4.5
2.6
0.0
1.0
2.0
3.0
4.0
5.0
2000 Census 2030 Proj.
Year
Wo
rker
s S
up
po
rtin
g O
ne
Eld
er
6
BUDGET PROJECTIONSBUDGET PROJECTIONS
“Beware of little expenses; a small leak will sink a great ship.”
- Benjamin Franklin
7
BUDGET PROJECTIONS
• Expenditures grew dramatically in fiscal 2006 and are projected to rise significantly in fiscal 2008
• The general fund is projected to register deficits beginning in FY 2008, if spending is left unchecked
• The income tax is projected to yield modest steady growth after a four fiscal year growth in estimates and final payments of over 97%
• Sales tax collections are forecasted to remain relatively stable (11.7% over projection period)
8
BUDGET GROWTH RATESGENERAL FUND
BUDGET GROWTH RATES
10.4%
5.1%
3.5%2.3%
4.9%
9.0%
0%
2%
4%
6%
8%
10%
12%
2005 2006 2007 2008 2009 2010Est. Fcst. Fcst. Fcst.
Fiscal Year
9
PROJECTED BALANCE OF THE GENERAL FUNDSTATE OF CONNECTICUT
General Fund Surplus/(Deficit)
Note: Fiscal years 2008-2010 assume appropriations prior to reductions required by the Constitutional expenditure cap.
$302.2$363.9
$446.2 $486.5
($695.1)
($899.7)($848.9)
- $1,000
- $800
- $600
- $400
- $200
$0
$200
$400
$600
2004 2005 2006 2007Est.
Fiscal Year
Millions
2008 Fcst.
2009 Fcst.
2010 Fcst.
10
CONNECTICUT REVENUESCONNECTICUT REVENUES
“In the end it's a revenue stream. And all revenue streams eventually reach the sea.”
- Paul Schrader
11
PERSONAL INCOME TAXEconomic Growth Rates of the Personal Income Tax
5.0
%
5.0
%9.5
%
8.7
%
-1.5
%
-1.8
%
6.0
%
7.8
%
6.0
%
7.1
%
5.0
%
21.9%
-14.7%
-23.5%
19.0%
14
.9%
22.8%
10
.6%
19.4%
5.0
%
5.0
%
5.0
%
-28%
-21%
-14%
-7%
0%
7%
14%
21%
28%
2000 2001 2002 2003 2004 2005 2006 2007Est
2008Fcst
2009Fcst
2010Fcst
Fiscal Year
Eco
nom
ic G
row
th R
ate
Withholding
Est & Finals
12
$1,501.0
$1,785.8
$1,361.7$1,230.6
$1,588.4
$1,943.5
$2,322.0
$2,565.8
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$2,200
$2,400
$2,600
$2,800
2000 2001 2002 2003 2004 2005 2006 2007
Fiscal Year
Est
. &
Fin
al R
even
ueEstimates and Finals Component
of the Personal Income Tax(in millions)
13
ESTIMATES AND FINAL PAYMENTS P.I. Tax Growth Rates For Selected Months
Fiscal Years 2005-2007
10.8%
25.8%
31.2%30.0%
22.8%
28.1%
17.6%
23.1%
14.0%
19.0%
10.0%8.1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
September December/ January April June
% G
row
th In E
stim
ates
Only
.
FY 2005 Actual FY 2006 Actual FY 2007 Actual FY 2007 Forecast
ESTIMATED PAYMENTS
17.9%20.9%
9.0%
- 40%
- 30%
- 20%
- 10%
0%
10%
20%
30%
FY 2005 FY 2006 FY 2007
FINAL PAYMENTS
14
SALES AND USE TAX
ECONOMIC GROWTH RATES OF THE SALES AND USE TAX
3.8
%
3.7
%
3.8
%
2.6
%
3.5
%
3.9
%5.1
%
-8.2
%
1.3
%
4.9
%
7.1
%
-11%
-8%
-5%
-2%
1%
4%
7%
10%
2000 2001 2002 2003 2004 2005 2006 2007Est
2008Fcst
2009Fcst
2010Fcst
Fiscal Year
Eco
nom
ic G
row
th R
ate
15
BUDGET RESERVE FUNDBUDGET RESERVE FUND
“Balancing the budget is like going to heaven. Everybody wants to do
it, but nobody wants to do what you have to do to get there.” - Phil Gramm, Senator, TX
16
STATES WITH BUDGET RESERVE FUNDS
Rank State Reserve in Millions % of Expenditures
1 Wyoming 892 71.8%
2 Alaska (1) 2,300 36.5%
3 New Mexico (2) 697 13.0%
4 South Dakota 137 13.0%
5 North Dakota 100 10.4%
6 California 9,009 9.7%
7 Nebraska 274 9.4%
8 Oklahoma 496 9.0%
9 Louisiana 682 8.8%
10 Virginia 1,306 8.6%
11 Massachusetts 2,160 8.4%
12 Iowa 392 7.8%
13 Connecticut 1,112 7.6%
20 New Hampshire 69 5.2%
24 Vermont 52 4.7%
31 Rhode Island 95 3.1%
32 Maine 80 2.8%
National Average 6.4%
Source: National Association of State Budget Off icers, preliminary FY2006 data, except
(1) Unaudited f igures provided by Alaska Office of Finance
(2) Final f igures provided by New Mexico Board of Finance
GENERAL RESERVE FUNDSFiscal Year Ending June, 2006
17
BUDGET RESERVE FUND BALANCEBUDGET RESERVE FUND
18
Balancing the State Budget During the FY02 & FY03 Economic Downturn Required the Following
Actions1. Draining of the then Fully Funded Budget Reserve Fund
2. Deficit Financing of over $300 million
3. Layoffs of over 2,500 state employees
4. Permanent Tax Increases on All Citizens Including:Raising the Personal Income Tax rate from 4.5% to 5.0%Increasing the Cigarette Tax rate from $1.11 to $1.51 per packReduction in the Sales Tax Clothing Exemption from $75 to $50 per item
5. Significant Saving Initiatives Including:Implementation of an Early Retirement ProgramTightening eligibility, eliminating coverage, and freezing enrollment in the Medicaid and HUSKY programsClosing intake to the Child Care programLimiting continued coverage under Temporary Family AssistanceReducing reimbursement levels to medical providersIncreasing client cost- sharing and co- payments for health care programs
19
BUDGET RESERVE FUND SHORTFALL
BUDGET RESERVE FUND AMOUNT BELOW TARGET
($145.5)
($79.3)($22.6)
$0.0
($373.5)
($400)
($200)
$0
FY06 Est. FY07 Est. FY08 Fcst FY09 Fcst FY10 Fcst
Milli
ons
20
THE EXPENDITURE CAPTHE EXPENDITURE CAP
“Always do right. This will gratify some and astonish the rest.”
-Mark Twain
21
10.8%
9.6%
4.8%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
'87- '91 '79- '93 '93- '07
Fiscal Year
An
nu
al %
Gro
wth
in E
xp
end
itu
res
ORIGIN OF THE EXPENDITURE CAPGROWTH IN STATE SPENDING
22
THE EXPENDITURE CAP – AN EFFECTIVE TOOL
USE OF GENERAL FUND SURPLUSES
FY1996 to FY 2006
23
EXPANDING COMMITMENTSEXPANDING COMMITMENTS
“A billion here, a billion there, pretty soon it adds up to real money.”
- Senator Everett Dirksen
24
STRUCTURAL HOLES CREATED BY FUNDING ONGOING EXPENDITURES WITH PRIOR YEAR SURPLUSES
IMPACT ON FISCAL 2008 - GENERAL FUND(IN MILLIONS)
From the FY 2005 Surplus Amount
1. Early Retirement Incentive Plan (ERIP) Accruals 22.0$
2. Non- ERIP Accruals 10.0
3. Education Cost Sharing Grant 32.2
4. Priority School District Grant 7.8
5. Magnet School Grant 1.0
6. Teachers' Retirement Contributions 50.0
7. Machinery & Equipment PILOT 7.2
8. Medicaid 4.2
From the FY 2006 Surplus
9. Teachers' Retirement Contribution 125.5
10. Medicaid Carry- forwards 90.0
11. Fringe Benefits Carry- forward 35.0
12. All Other Carry- forwards 6.1
13. Revenue Transfer from FY 2006 to FY 2007 41.0
Total 432.0$
25
DEPARTMENT OF CHILDREN AND FAMILIES
DCF EXPENDITURES(In Millions)
538.8565.5
607.5668.1
729.4
793.5
891.7933.7
$200
$400
$600
$800
$1,000
02 03 04 05 06 07 Est 08 Fcst 09 FcstFISCAL YEAR
26
DEPARTMENT OF EDUCATIONDEPARTMENT OF EDUCATION GRANTS
(In Millions)
Note: Figures provided for FY02 – 05 are revenue based (not entitlement based) in that they include prior year adjustments.
27
DEPARTMENT OF MENTAL RETARDATION
DMR EXPENDITURES(IN MILLIONS)
701.0719.3 719.0
752.5
820.4
865.5
955.8
1,011.4
$600
$700
$800
$900
$1,000
2002 2003 2004 2005 2006 2007 Est 2008Fcst
2009Fcst
FISCAL YEAR
28
INCREASING PHARMACY EXPENDITURES
(IN MILLIONS)
Actual Estimated Requested Requested% Increase
FY2009 over
FY2006 FY2007 FY2008 FY2009 FY2006
Dept of Social Services $499.2 $471.2 $545.6 $589.1 18.01%
Dept of Mental Retardation 0.3 0.3 0.3 0.3 0.00%
Dept of Mental Health and Addiction Services 9.7 10.4 10.9 11.4 17.53%
Dept of Correction 14.6 17.0 18.3 19.8 35.62%
Dept of Children and Families 1.0 1.1 1.3 1.4 40.00%
Dept of Veterans' Affairs 1.0 0.9 0.9 0.9 -10.00%
Workers' Compensation Claims 2.4 2.7 3.1 3.5 45.83%
State Employees including Retirees 267.2 294.0 322.5 353.8 32.41%
Teachers' Retirement 20.1 24.2 26.6 29.3 45.77%
Grand Total $815.7 $821.7 $929.5 $1,009.5 23.76%
29
MEDICARE PART D
•MedicaidClawbackEligibilityManufacturers Rebate
•ConnPACE
•Medicare Part D Supplemental Needs Fund
•State Employee Subsidy
30
SUMMARY OF LOCAL AIDESTIMATED FORMULA GRANTS TO MUNICIPALITIES
(IN MILLIONS)
31
DEBT LEVELSDEBT LEVELS
“A balanced budget takes us in the right direction. Clearly, adding
billions and trillions of dollars to our debt takes us in the wrongdirection.”
- Tim Johnson, Representative, IL
32
DEBT BURDEN COMPARISONRanked by State Debt
Ranked by Per Capita State Debt As a % of Personal Income (PI)
Rank State Amount ($) Rank State Debt/ PI
1 ALASKA 8,709 1 ALASKA 25.6%
2 MASSACHUSETTS 7,957 2 MASSACHUSETTS 18.9%
3 CONNECTICUT 6,452 3 RHODE ISLAND 17.6%
4 RHODE ISLAND 6,010 4 CONNECTICUT 14.2%
5 DELAWARE 5,010 5 DELAWARE 14.0%
6 NEW YORK 4,964 6 HAWAII 14.0%
7 HAWAII 4,553 7 NEW YORK 13.0%
8 NEW HAMPSHIRE 4,537 8 VERMONT 12.9%
9 NEW JERSEY 4,119 9 NEW HAMPSHIRE 12.4%
10 VERMONT 4,086 10 MONTANA 11.9%
11 ILLINOIS 3,833 11 MAINE 11.8%
12 MAINE 3,532 17 NEW JERSEY 9.9%
UNITED STATES 2,560 UNITED STATES 7.7%
33
IMPACT OF DEBT EXPENSESGENERAL FUND DEBT SERVICE EXPENDITURES
$2.05$1.93$1.81$1.73$1.68$1.54$1.40$1.39$1.37$1.23$1.09
11.7%
11.5%
11.4%11.2%
11.7%11.5%
10.7%
10.6%
10.8%
11.1%
10.8%
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
$2.0
$2.2
'97 '99 '01 '02 '03 '04 '05 '06 '07
Est.
'08
Fcst.
'09
Fcst.Fiscal Year
Deb
t Ser
vice
(B
illion
s)
8%
9%
10%
11%
12%
13%
Deb
t Ser
vice
As
% O
f Bud
get
34
FIVE YEAR BOND FIVE YEAR BOND PROJECTIONSPROJECTIONS
35
PROJECTED GENERAL OBLIGATION BOND ALLOCATIONS
FY2007 FY2008 FY2009 FY2010 FY2011
School Construction Program 677,000,000$ 675,000,000$ 675,000,000$ 560,000,000$ 500,000,000$
UCONN 21st Century 89,000,000 120,000,000 155,000,000 160,500,000 161,500,000
State University System 50,000,000 141,000,000 88,000,000 179,000,000 140,000,000
Community College System 132,600,000 69,800,000 146,200,000 99,500,000 68,400,000
Sub- Total Education Allocations 948,600,000$ 1,005,800,000$ 1,064,200,000$ 999,000,000$ 869,900,000$
New Public Health Laboratory - - 81,700,000 - -
Urban Action Grants 50,000,000 50,000,000 25,000,000 75,000,000 75,000,000
Manufacturing Assistance Act 45,000,000 35,000,000 25,000,000 40,000,000 40,000,000
Local Capital Improvement Program 30,000,000 30,000,000 30,000,000 30,000,000 30,000,000
Small Town Economic Assistance Program 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000
Clean Water Grants 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000
Housing Trust Fund 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000
All other GO projects/ programs 100,400,000 84,200,000 14,100,000 101,500,000 231,600,000
Grand Total GO Bond Allocations 1,224,000,000$ 1,255,000,000$ 1,290,000,000$ 1,295,500,000$ 1,296,500,000$
36
ACTUAL & PROJECTED GENERAL OBLIGATION BOND COMMISSION ALLOCATIONS
37
DISTRIBUTION OF GO BOND FUND ALLOCATIONS
ACTUAL FY2002 - FY2006
PROJECTED FY2007 - FY2011
UCONN 21st Century10.8%
Community College System8.1%
State University System9.4%
Manufacturing Assistance2.9%
Clean Water Grants1.6%
Urban Act4.3%
All other projects/programs8.4%
DPH Lab1.3%
LOCIP2.4%
School Construction48.5%
Housing Trust Fund0.8%
STEAP1.6%
38
LONG TERM LIABILITIESLONG TERM LIABILITIES
"Zeroes are important.“
- Denis Hayes, author and contributor to Starbucks ‘the way I see it”
39
LONG-TERM OBLIGATIONS•The state’s long-term obligations total $50.0 billion.
•This equates to approximately $14,280 for every man, woman and child in Connecticut
•In comparison, total Personal Income Tax collections in FY07 will only be $ 6.625 billion.
Bonded Indebtedness $ 14.8
State Employee Pensions – Unfunded 6/ 30/ 2006 * 7.9
Teachers' Pension – Unfunded 6/ 30/ 2004 5.2
State Employee Post Retirement Health and Life - Unfunded 21.1
Teachers' Post Retirement Health and Life - Unfunded -
GAAP Deficit 1.0
Total $ 50.0
LONG- TERM OBLIGATIONS
(in billions)
* Actuarial valuation for fiscal year 2006 released on 11/16/2006.
40
UNFUNDED PENSIONSSTATE EMPLOYEES RETIREMENT SYSTEM AS OF 6/30
41
342.8 375.6415.5 425.9
474.0516.3
623.1663.9
717.1757.9
$0
$100$200
$300$400
$500$600
$700$800
$900
'00 '01 '02 '03 '04 '05 '06 '07 '08Fcst
'09Fcst
Fiscal Year
Millio
ns
STATE EMPLOYEES RETIREMENT SYSTEM CONTRIBUTIONS
CONTRIBUTIONS TO THE STATE EMPLOYEES RETIREMENT SYSTEM
Mill
ions
42
STATE EMPLOYEES PENSION &HEALTH INSURANCE – ALL FUNDS
SERS & HEALTH INSURANCE EXPENDITURES As Of 6/30
$415 $426 $474 $516$623 $664 $717 $758
$368 $394$430
$486$508
$603$615
$673
$203$240
$318
$374
$394
$436$452
$509
$986$1,060
$1,222
$1,376
$1,525
$1,703$1,784
$1,940
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$2,200
'02 '03 '04 '05 '06 '07 '08 Fcst. '09 Fcst.
Exp
end
itu
res
($M
)
SERS Active Health Ins. Retiree Health Ins. Series4
Note: FYs 07, 08 and 09 Retiree Health includes offsets for the anticpated Medicare Part D Employer Subsidy.
43
UNFUNDED PENSIONS CONNECTICUT TEACHERS RETIREMENT SYSTEM
TEACHERS RETIREMENT SYSTEM AS OF 6/30
$5.2
$3.3
$2.2
$3.2$3.0
$2.6$2.4
65%
69%68%70%
76%
67%
81%
50%
55%
60%
65%
70%
75%
80%
85%
1992 1994 1996 1998 2000 2002 2004
Unfunded Actuarial Accrued Liabilities
Fun
ded
Rat
io
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
$5.5
Bill
ions
Unfunded Pensions
Funded Ratio
44
UNFUNDED PENSIONS TEACHERS RETIREMENT SYSTEM CONTRIBUTIONS
$170$176
$204 $215 $205$180 $185 $185
$396$412
$433$454
$226 $236
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2000 2001 2002 2003 2004 2005 2006* 2007* 2008Fcst
2009FcstFiscal Year
Mil
lio
ns
Surplus Funds
* For FY06 and FY07 the f igures are inclusive of $170 million and $176 million from the FY05 and FY06 Surplus Appropriation
45
SCARCE DISCRETIONARY SPENDING ROOM Fiscal 2008Requested
Budget(in millions)
Allowable Growth in Capped Expenditures 445.0$
Expenditure Increases1. State Employee Personal Services (1) 282.9$ 2. State Employee Retirement Contributions 53.0 3. State Employee Health Benefits 46.9 4. Retired State Employee Health Service 16.4
Total 399.2$
Payroll And Benefit Increased Costs As A Percent Of Allowable Capped Growth 89.7%
(1) Exclusive of current expense appropriations; includes HigherEd Personal Services, RSA wage items, and non- ERIP accruals
46
2005 STATE RETIREMENT SYSTEM STATISTICS
STATE EMPLOYEE AND TEACHERS’ SYSTEM COMBINED
Actuarial Funding Unfunded Liability
Rank State Ratio (in millions)
1 North Carolina 108.1% - $3,555.7
2 Florida 107.3% - $7,621.9
3 Delaware 101.6% - $87.3
4 Tennessee 101.5% - $360.2
5 Georgia 100.0% - $9.6
46 Illinois 60.5% $37,799.9
47 Rhode Island 59.4% $3,785.6
48 Connecticut 59.1% $12,693.7
49 Oklahoma 57.3% $9,224.5
50 West Virginia 47.1% $5,658.3
Mean 82.5%
Median 83.9%
Source: National Association of State Retirement Administrators
Public Fund Survey for FY 2005.
47
OTHER POST EMPLOYMENT BENEFITS
• The Governmental Accounting Standards Board (GASB) requires large employers, such as the State of Connecticut, to quantify the amount of non-pension retirement benefits offered to employees beginning in fiscal year 2008
• Connecticut’s substantial health benefit package results in a significant unfunded liability. Preliminary estimates of this unfunded liability are most likely to exceed the liabilities of the unfunded liabilities of SERS and TERS combined
• Connecticut’s unfunded liability may place the state at a disadvantage relative to other states that have a much lower unfunded liability or have undertaken a plan to address such shortfalls
• Connecticut will also have to quantify the amount of non-pension retirement benefits offered for Teachers
• Estimated medical and dental actuarial accrued liability ranges from $8.4 billion (advance-funded basis) to $21.1 billion (unfunded basis)
• Other Post Employment Benefits for State employees are governed by an agreement with the State Employees Bargaining Agent Coalition (SEBAC) on pension and healthcare benefits that extends to 2017; changes can occur only if the State and SEBAC agree to reopen the agreement, or via arbitration
48
RISING ENERGY COSTS
(1) Final FY2006 expenditures are not yet available; the amounts shown above may not agree with official figures to be published in the Comptroller's Annual Report
(2) Includes $4,425,000 in unpaid bills attributable to FY2005 operations
(3) Figures from agency FY2007 - FY2009 Current Service Budget Requests
(4) $10M available in OPM Energy Contingency account to meet agency needs
GENERAL & SPECIAL TRANSPORTATION FUNDS(IN MILLIONS)
49
SUMMARYSUMMARY
50
SUMMARY• The state is projected to experience a surplus at the end of FY2006-07.
• Projected spending will exceed available room under the expenditure cap in fiscal years 2007-08 and forward if spending is left unchecked.
• Beginning in fiscal year 2007-08 the state will experience significant deficits if spending remains unchecked.
• Debt service as a percent of budget expenditures will continue to grow despite maintaining general obligation allocations and issuances fixed at the current level.
• In order to achieve a significant reduction in debt service as a percent of budget expenditures, reductions in bond issuances would be required.
• Energy costs have risen almost 100% between FY 2000 and FY2007.
• Major issues and trends impacting the state’s fiscal situation include: Pharmacy costs, personnel costs, retirement benefits, expenditures related to the Department of Children and Families, the Department of Correction, Department of Education, and Department of Mental Retardation.
• The state faces significant long-term obligations including debt, unfunded pension liabilities and unfunded post-employment retirement benefits.
• The ability of the State to deal with unfunded liabilities will become increasingly difficult due to a “demographic deficit” – CT’s median age increases 10% through 2030, with significant growth in age groups over 65.