O F F I C E O F L E G I S L A T I V E R E S E A R C H
P U B L I C A C T S U M M A R Y
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PA 21-178—SB 1081
Appropriations Committee
AN ACT CONCERNING TH E INTEREST RATE RELA TING TO
TEACHERS' RETIREMENT SYSTEM COST -OF-LIVING
ALLOWANCES AND RESER VING CERTAIN LOTTERY FUND
REVENUE FOR THE CONN ECTICUT TEACHERS' RE TIREMENT
FUND BONDS SPECIAL C APITAL RESERVE FUND
SUMMARY: Existing law links the cost of living adjustments (COLA) for
Teachers' Retirement System (TRS) members to the Social Security benefit
COLA, subject to specified maximums based on the Teachers’ Retirement Fund’s
(TRF) investment returns. This act reduces the investment return thresholds used
to determine the maximum COLAs from 8.5% to 6.9% and 11.5% to 9.9%,
respectively. In doing so, it aligns these thresholds to the TRF’s 6.9% assumed
rate of return approved by the Teachers' Retirement Board as part of the fund’s
2019 restructuring.
Under the act, members who joined TRS before July 1, 2007, may receive a
maximum COLA of 1.5% if the total return on the TRF’s assets in the preceding
fiscal year is less than 6.9%, rather than 8.5%. For members who joined on or
after July 1, 2007, the maximum COLA is 1% if returns are less than 6.9%, rather
than 8.5%; 3% if returns are between 6.9% and 9.9%, rather than between 8.5%
and 11.5%; and 5% if returns are greater than 9.9%, rather than 11.5%.
Existing law establishes a regionalization subaccount in the General Fund's
regional planning incentive account to fund recommendations from the
Regionalization Task Force created under the FY 20-21 budget act. Prior law
directed to this subaccount revenue that the Connecticut Lottery Corporation
(CLC) makes from online lottery games, in excess of the amount equal to the
debt-free college program. The act specifies that this online lottery revenue is
directed to the subaccount only after payment to the Connecticut Teachers’
Retirement Fund Bonds Special Capital Reserve Fund (SCRF). Existing law
pledges CLC lottery revenue to refill this SCRF if its funding level falls below the
required minimum capital reserve amount. PA 19-117, § 82, established the fund
to secure outstanding TRF pension obligation bonds.
EFFECTIVE: July 1, 2021, for the COLA provision and upon passage for the
lottery revenue provision.