I apologize for the following error.

In the June 9, 2011 memo to Andrew McDonald paragraph 3 “June 2, 2011” should read June 1, 2011. Thank you.

[June 9, 2011 memo attached]

To: Andrew McDonald From: Anthony McKnight Sr. Re: Fed Complaint 3:10cv1471 Date: June 9, 2011

Dear Sir, I am in receipt of the May 10, 2011 response to Federal Complaint 3:10cv1471 from the State of Connecticut Attorney General Office, Assistant Attorney General Maura Murphy-Osborne. This correspondence is an attempt to bring to the attention of the Office of the Governor , the disparities within the policy and the legal defense within the response. For instance, on June 2, 2011, the governor during a press briefing mentioned, I believe, about adhering or abiding by the law. The response of the assistant attorney general does not reflect that policy. State Senator Suzio mentioned during a June 2, 2011 session at hour five through hour five and thirty minutes that the “methodology” (not the law) used by the state during the previous two decades or More were fraudulent, and in fact the state kept two separate records. “Mistakes were made in the past.” The Governor stated on June 9, 2011. However, the attorney representing your administration is using the very same fraudulent arguments of the past. I have requested a conference with defense counsel, to no avail. The state has until June 13, 2011 to respond to the complaint. Is it possible that your office can meet with defense counsel and reach a common defense? This will save some time and costs involving the complaint. Senator Harp retorted that what transpired during the course of the past two or more decades was not fraud. State employees intentionally misrepresented facts material to my workers compensation benefits among other things. If it was not fraud, then why did this happen to me? Consistent with ‘mistakes’, Why hasn’t anyone fixed this? No that you can, but assistant attorney argument indicates ‘not fix’, ‘not mistake’, ‘ not fraud’. Can you please confer with the Office of the Attorney General and maybe come to a consensus? Once again, I will have to make FOI requests etc., and I would like to save the time and money if your intention is to settle this case so I can get on with my life, or not. Thank you for your time and consideration into this matter.

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CERTFICATION
This is to Certify that a copy of the Foregoing has been electronically mailed to State of Connecticut Assistant Attorney General Donna Hixon-Summers at donna.summers@ct.gov on this 2nd day of January, 2011. This is to Certify that a signed copy of the Foregoing has been sent Via Facsimile this 2nd day of January, 2011 to Assistant Attorney General Donna Hixon-Summers at (860) 808-5387. This is to Certify that a signed copy of the Foregoing has been posted for download at Urbnanthony.com. A Copy of the Complaint/ Amended Complaint was mailed Via US Mail on November 23, 2010 and a signed copy will be mailed January 5th 2011 to Assistant Attorney General Donna Hixon-Summers 55 Elm St., Hartford, CT 06106.

APPENDIX B

APPENDIX C

APPENDIX D

APPENDIX E

APPENDIX F

PO: Hey, Anthony. AM: Hey, how’s it goin? PO: How’s it goin, man? ML: Matt LaCluyze, nice to meet you. PO: How’s life, alright? AM: Alright... ML: I appreciate you meetin us. AM: …if homeless is alright. …If homeless is alright. PO: Well, we all got our cross to bear, right? AM: Yup. PO: Some of the greatest….hey I’m gonna walk inside. I gotta use the… bathroom. AM: Yup. It’s downstairs to your right. PO: Alright, thanks man. ML: I appreciate you meetin me. AM: Yeah, what’s what’s going on basically? ML: You tell me, what can we do for you? AM: Well, I’m waiting for Worker’s Compensation to settle my case. ML: Okay. AM: I, ya know, I have…I heard from the Disabilities people,… ML: Okay. AM: …since I talked to you and, um, they were gonna pick it up. But the judge had sent me a... the paperwork. I got it Saturday afternoon… ML: Okay. AM: …And he’s giving the State til November 19th…um, ML: Okay AM:…you know whatever they plan on… whatever they plan on…

*ML: The disabilities part of it is that separate from the Workman’s Comp thing or are they all together. AM: It’s all together. ML: Okay AM: Basically, I was fired, when I became disabled. ML: Okay AM: You know I got….you saw the file. You know…I basically got hurt in the riots back… ML: Yup. …then. And they terminated me while I was out on Worker’s Compensation. ML: Okay. That was back in ’94? Is that correct? ’95? AM: I just found out in 2009, it was ’94. ML: Okay. AM: I really don’t know when. They were messing with my files and they put … uh, people were putting things in my... They made a case, whoever it was in Personnel or Human Resources, DAS… ML: Okay. AM: or whatever they jumbled up my file and I just really found out about this in 2009, when I... ML: Okay. AM: …went to retire… ML: Yup. AM: …that I was fired, so that’s basically how this started. ML: Yup. AM: That’s basically the just of it. They…they asked me. I didn’t know I was terminated until uh, Helen Kemp, I put in my papers and the Comptroller’s Office told me that they had terminated me in 1994 when I was out on Worker’s Compensation. So we had a hearing in…on May 5th of this year … ML: Yeah.

AM: … in front of Commissioner Delaney and ML: Yeah. AM: …the Assistant Attorney General, she, uh, admits to losing and destroying papers in my file. Things were in my file, that weren’t supposed to be in my file. ML: Yup. AM: ...They don’t know who put it in my file. You know they…they put, somebody, uh, put together a Separation of State packet or whatever, you know and I had no idea it was in there. I didn’t sign any papers or any of that thing like that… ML: Yup. AM: You know, but what I did do I told ‘em I would consider my resignation, but you know you’re a State Police Officer…. ML: Yup. AM: …you know that you have to retire from State Service, if you get injured off…when you get injured on the job ML: Yup. AM: …you have to sign your way, you know, ML: Yup. AM: …your way out. And that never happened. You know, it’s been 17 years, I been trying to get this to happen. ML: Yup. AM: You know then this guy Dzuzenda or whatever his name one of the warden’s from DOC, he was in charge of the Task Force in ’95… ML: Okay AM: and they came at me, you know they were staking out my house and everything. They were doing some crazy crap. So I basically left the state. ML: Okay. AM: And then the…the Justice Department and this dude that I met down at the Bureau, down here on Orange St. in New Haven from the FBI… ML: Okay.

AM: He looked up some things and he…and they took it from there and the ball got rolling; you know they basically took my case from 1995 because I filed a Federal lawsuit against John Roland… ML: Okay. AM: and the DOC then ML: Yup AM: …you know for Harassment, Discrimination…or whatever…what have you. And then they picked up my case and started investigating and it’s too bad they didn’t get Blumenthal and all of ‘em. They only got Roland, ML: Yup AM: …you know, so…Rell’s still there and then this thing with Sisco…Brenda Sisco. And she’s at OPM, she was at DAS. They had the Agency for Affirmative Action in DAS and she was doing all this crazy stuff, you couldn’t…you know even when I filed a complaint and I went out to the Trooper’s Barracks out here in Bethany… ML: yup. AM: …the troopers wouldn’t do anything. They wouldn’t do anything. They said they couldn’t do anything about it. And it wasn’t until Agent Boone got involved that they really started to take it seriously. ML: Now, what did you tell the troopers*(cant hear what he said) by that time? AM: Oh, I told them they’re out there. I feel like that’s kind of Harassment. You know, I’m out here on Worker’s Compensation… ML: Yup AM: …you know I’m trying to get a Doctor you know and they took my Doctor away….and then I started getting letters: I’m on out on work…I’m on “Unauthorized Leave of Absence” la la la and “if you don’t do this were going to terminate you.” ML: yup AM: You know, I didn’t think these people were serious, I mean here I am sitting out here on Worker’s Compensation ML: yup AM: and they’re sending me letters to terminate me. They took my Doctor. ML: Okay.

AM: You know I went in front of Worker’s Compensation 13 times. That’s like a kangaroo court. I mean 13 times. ML: Yeah AM: 13 times I went. I even won my case. The Commissioner ever granted me my injuries and they still, (Cant hear what you said Phone call) AM: Hm? Liz, oh I’ll call her back. but you know they’re basically uh ML: I’m just gonna take notes if you don’t mind PO: What’s the current status of the Workman’s Comp claim now? AM: Well, I’m waiting (chuckle) ….. PO: I mean it’s been going on for so long. AM: Yeah, but this is the thing….Delaney, Commissioner Delaney he heard the PreFormal hearing on my first* in 1990 uh ’95, ’96, ’97. He heard all of my PreFormal issues. The issues I raised in my PreFormal was the same issues he granted Cozzolino or Cozzolini. The same issues that I raised where he said he couldn’t give me my benefits; the same issues that he…his attorney raised for him and he got his benefits. And Commissioner Delaney said so on may 5th that he actually heard his Cozzolino… PO: The white C.O., the white guy? AM: Yeah, I mean there’s a few of em. I mean, I’m doing my work and they’re not doing their work. You know, I’m not stupid. If I go…If I go up in front of the Commission and I’m out here and I’m interviewing … I’m not only out here filing for myself….I’m out here interviewing people that I worked in the union that I represented in the State of Worker’s Compensation issues in DMR and the Department of Corrections. PO: Yeah, but his situation didn’t work out for him. AM: Yes it did. His situation worked out great. He Retired. PO: That’s not what we heard, right? ML: Yeah, he may have retired, but he’s not getting any benefits. PO: He’s not getting any benefits. AM: No, he’s not getting his benefits now, because they overpaid him his benefits. His benefits will kick back in, in a few years. But the issue is…is what the reason, the reason why I’m not getting my benefits is the same reason he’s getting benefits. I mean, if you’re injured on the job and you can’t and you get the medical documentation and the your Doctors, and the State’s Doctor, and the Commissioners’ Doctor, and the Judges’ Doctor say you can no longer do your job, because of

that injury and I don’t get credited for service for the time that I’m off from work and he gets credited time for time he’s off of work was the same issue. The same medical issue. I can not do my job any longer and I have the same medical documentation. I mean, I researched his case. It’s the same issue and all I’m saying is how did he get credited for service and I don’t get credited for service? How does someone put a Separation of State Form in my folder? How did I retire and I didn’t get any retirement paperwork? How did it happen? Who actually sealed this stuff and signed my paperwork and all this stuff to process me out of State Service. ML: Now you mentioned before that there was a, um, Commissioner or somebody you said that, that uh admitted to you that something…stuff was in you file that shouldn’t have been. AM: Yeah, I mean the, I mean the, Co… ML: Do you remember? AM: Commissioner Delaney. We were…. ML: No, no, no. AM:...sitting there in a PreFormal ML: No, you mentioned that it was a State, not a senator or somethin like that. I know you mentioned Delaney, you said there was somebody, I don’t know if it was DAS or wherever, you said they finally admitted to you there was paperwork in your file that shouldn’t have been there. Do you remember who that was? AM: No, no, no, there was a…You’re talking about the Attorney General….. ML: Yes, okay….. AM: Assistant Attorney Donna Hixon-Smith…. ML: Okay, now she…. AM: ...that’s who you’re * talking about (?) ML: I’m just asking you because you didn’t say the name earlier, you just mentioned somebody from…. AM: From the Attorney General’s Office. ML: Okay and that was….*(?) AM: Yeah, you could *...I mean you need to talk to her and you need to talk to ML: What was her name again? AM: Donna Hixon-Smith…what was…is her name still Donna Hixon-Smith…uh Summers, she changed it to Summers…Summers like the PO: Donna Summers… ML: Donna Hixon-Summers PO: She’s not singing now is she (ML and P chuckle)

AM: Hey man, it was a crazy ride. I don’t know what she’s doing now, but she’s* it’s like a chameleon. PO: And she’s a Assistant Attorney General. AM: Yeah, they’ll tell you. And you might want to talk to Dianne Pierpont. She's still at, uh…. DT: Social Services AM: …Social Services. She use to be at DOC, but she’s at Social Services. PO: Dianne? Pierpont? AM: Pierpont. Yeah, she was managing my file at DOC. And Linda Fowler retired. I don’t…I never met Mitch Drabek…but he sent… PO: Where’s Dianne at now? You said she … AM: Dianne Pierpont is at Social Services. PO: Social Services, she was at DOC. AM: Right, now I have never met Mitch Drabek, but he’s the one that sent me the termination, unauthorized leave of absence papers. PO: Okay, now who’s that? What’s his name again? AM: Mitch Drabek. I don’t know who this guy is. But he’s the one that sent me those papers back then. PO: But, he’s not from DOC? AM: He’s from DOC when I was there you know when I was going through this PO: Personnel Division…or somethin? AM: Right, I never met him, because he was saying come into my office so I could terminate you…or something…I was like terminate you I got * ….this is the peculiar thing…..He, They gave 300 some odd days of unauthorized leave. You…it’s crazy…I don’t know what… PO: And you were out on Workman’s Comp during that time? AM: Yeah, I have the decision in here. This is what I’m saying….I mean I don’t know if I’m talking a different language or something, but I mean I have a* when the judge, when the commissioner granted me and said that I was entitled to Worker’s Compensation benefits, this is the reason why I appealed to the Appellate Court and argued my case in front of the Supreme Court is because I knew that once they affirmed the decision of the Commissioner that they couldn’t go back and change it. Do you understand what I’m saying? That was the only security I had was to get this on paper.

PO: Yep…So that’s on file now they can’t touch it…

AM: Yes. They can’t change that. But what I’m trying to tell you is they’re trying to change …that! This is what I’m, I mean…. PO: What I don’t get though is, I read your file and they said there’s unauthorized leave of absence. How could you have been on Workman’s Comp., but it’s still technically leave of absence? I don’t understand that. You know what I mean?... AM: Help me. PO: …Maybe you weren’t technically out on Workman’s Comp. I mean were you? You can’t be… AM: You want to read the decision? PO: …What I’m saying is…one can’t be with the other…. AM: (chuckle) Hey, two, what did I say? PO: …you know what I mean? Hey, that’s why I’m asking you. Those letters say…. AM: Two objects cannot occupy the same space at the same given time. PO: Those letters say, “Mr. McKnight…. AM: Yeah… PO: “… you need to give us medical information as to why you’re not here; you’ve not been at work. We’re looking for you.” You know what I mean? AM: Yeah, they had all that. PO: That doesn’t make sense though. If you’re technically out on Workman’s Comp, they wouldn’t be calling you or asking you that if you’re on Workman’s Comp. AM: Look man, I would say the devil, but they’ll say there’s something wrong with me. You know?.... PO: You understand …you understand why I’m asking you that? AM: ...I call it what it is. AM: I say, I’ve been saying it for 17 years, when I lost my house, my kids, my wife, everything. I been saying this and just like you’re sitting there saying you don’t understand…I went in there just like you and everybody else does and I put my hand up when I went through that academy and I don’t know how you feel if somebody is sittin there hitting you with all kind of weight equipment and this and that and mop sticks, broomsticks, buckets, trashcans and you’re in there fighting for your life, but if your jaw gets broken, your shoulder gets dislodged and your sitting there all in the

infirmary at the jail you know that’s not a good thing and you would think that people would actually not make sure that your bills don’t get paid, but that’s what they did. They basically ruined my life. That’s what they did. You got some evil people in Department of Corrections. That’s just how it is. I don’t have to make it up. I don’t have to make it up. I mean I got all the paperwork. I mean, I sent in the paperwork if you… PO: Now let me ask you something... AM:…If you want to see all the paperwork…here’s the document PO: …No, I wanna ask you a question…. AM: Yeah… PO: Now is this an issue regarding you specifically or an issue regarding DOC and the issue of race? AM: I think it’s a…Well I’m a say this to you…I think it’s an issue…I think it’s an issue of how they treat the disabled people, it is a issue of race and when it comes out….every Negro and Hispanic Officer I spoke to and it’s been quite a few of them, uh, they all said that they’ve been offered the same Chapter 568 benefits and not the 5-142 benefits, now I don’t know, that can’t just be a coincidence that where if I sit here and you’re the judge and the Law says well ‘If you qualify for these benefits, uh, you’re guaranteed this under the Law provided you get injured on the job.’ Like say if you was to Thank God you…God forbid if you were to get shot and the Law says ‘If you get shot while doing your job today that, you know, your hospital bills are gonna get paid and they’ll say well if you can’t go back to work we’re gonna continue to pay your check, which is only right you almost lost your life…. PO: Right AM:…. doing your job defending this thing right here. So if the Law says that and I go to you as a judge saying you know I just got shot I got bills I got this and you’re telling the judge wait a minute, uh, but we got something over here for you and you’re saying no I, I want my benefits…No well we’re not gonna give you you’re benefits, we’re gonna give you...you know $150 a week, and then you’re gonna this and that and the other thing, you know, that’s crazy, but then if I look on and I do my research and I go up here to the appropriations committee and I actually look at the numbers and I’m finding out well where this money is going and I go to see Mr. Cicchetti in his law firm and I see, uh, Deborah Nemeth in her law firm and I know the Corrections Officers and them that went and they represent them and they’re telling me the same stories that I’m getting and the attorneys that are representing the Negroes over here are giving these people Chapter 568 benefits, but Cozzolino and Cicchetti and them are giving their people 5-142 benefits there’s something wrong. There is something wrong. And when you file a complaint…If I file a complaint to…to the person that’s out here discriminating against me and the Affirmative Action is in the department that…how can I file a complaint when the Attorney General’s Office is representing them and the and the Affirmative Action is in the Attorney General’s Office? And he’s the one that is going in and he’s arguing his case against me. Now you think the Affirmative Action is gonna hear my case? It’s been 17 years. I got a letter last week and it’s been 17 years. I filed these papers in 199394. 17 years. Come on you gotta be kidding me. I got people from Washington, D.C., calling me now. And they’re talking 17 years, like I want to talk to them now. All they got…you know the

judge, the judge he did write me. The judge said they have…he wrote me last um…Friday, I got this last Friday. ML: Now, which one, which one’s that? AM: Hey man, this is the best letter I ever had. This is the judge…The Federal Judge, downtown judge. He wrote me last week. He didn’t even wait for the watcha…he didn’t even wait for their response to my complaint or nothin’ he just says …you, you know…this is why I thought you came from Worker’s Compensation to…tell Mr. Mastropietro and them, they have 19 days before they pick it up and, I mean, I don’t think they want those people like that in their ass. Because, I had nothing to do with that…. PO: Yup. AM…no one ever helped me like this, in 17 years. That’s why I didn’t want to, I was kind of ML: So, they have to have the decision out for you…. AM: By next Tuesday. ML: Okay and that’s from Workman’s Comp? AM: They know I’m…and this is what’s so funny…why make me wait all this time? I mean, I’m still homeless 6 months after the hearing. If you’re gonna give me my money couldn’t you just give it to me on the 6th. I mean, it…it’s…no, but …what I’m saying the people that are calling that are interested in this case now are…are not just bullshittin’ around. You know and I’m saying why you need people like that blowing smoke up your ass, just to get you moving, when this takes 17 years. Why don’t you just sign the paperwork, give me my check, give me my Blue Cross Blue Shield like I had before so I can go to my dentist and get my jaw fixed or whatever has to be done. I’ve been bleeding for 16 years * so…. ML: Let me ask you a question, were you…did you apply before and were denied? AM: Apply for what? ML: Workman’s Comp. AM: No. ML: Like before your retirement…were…did you apply before...so you didn’t apply before? AM: Never…see this is what I’m saying when you get hurt on the job, they could retire you with what they call a disability retirement PO/ML?: Yup, which one is the… AM: 568 ML:….568 or the ok….and the 142 is what?

ML: That’s the…. AM: The 142 is the Chapter 65. See Chapter 568 deals with the Worker’s Compensation Law, Chapter 65 just deals specifically Public Safety Officials employee of Department of Corrections, etc., etc. ML: So, they let you retire on Workman’s, but they won’t let you as a State Employee, correct? AM: They won’t process my papers. ML: Okay. PO: Are you gonna file a motion about this or no? AM: I just want my money. I don’t want to file. PO: I know, but this judge is ruling against you. AM: No, he’s giving me an extension, basically PO: Well, he’s saying that…that the grounds of what you put forth on the claim are not sufficient probable cause… AM: If you just read… PO: I read the whole thing and it says at the end that you have an opportunity to file a motion by the 19th. AM: Right. PO: Otherwise, it’s over. AM: Right, this is what I’m saying. PO: Are you filing a motion? AM: I won’t know. It depends on if the case is disposed of on the 2nd. They have until the 2nd. PO: Ok…you realize that this judge says the facts that you put forth… AM: I didn’t put any…. PO: are not…. AM: I didn’t put any facts. PO: That’s what he is saying. He said there are no facts. AM: But, I’m gonna put the facts forth.

PO: Oh, because I’m thinking you better do it sooner or later. AM: I have until the 19th and I have a meeting with the disabilities people, so, They’ll be…see what happened is…what happened is they had a…the timing the timing from the EEOC and the overlap from the time the Worker’s Compensation has their decision is like a 2 weeks difference. So the 2 weeks difference I had…they…like I told you, if they wanted to render the decision before the November 2nd deadline they could have and I wouldn’t have to be going through this, but because they didn’t I have to file these papers in Federal Court, to keep my options open. My “Ability to Sue” them open, so this is only basically a 30 day extension.

PO (to ML): This is saying he didn’t put any facts forth regarding the case…there’s not sufficient facts to even have a case and… AM: Until I file. PO (to ML): he has to file with sufficient facts ML: Are you gonna file though? AM: They said they’re gonna let me know next week. ML: Alright, so, and that’s from Workman’s Comp, right? AM: Right, see I can’t file…. ML: If the Workman’s Comp denies you, you’ll file a claim? AM: If they...If they give me my decision and allow me to retire the…this is not anything. PO: But, what I’m saying is, why haven’t you provided them with the facts prior to this now? AM: Because, I’m sitting here waiting for the decision from OPEB… PO: Okay. AM: …I’m waiting for the decision from the Department of Administrative Services… PO: Yup. AM: …and I’m waiting for the Treasurer and Christine Shaw and them. That’s why. PO: Okay. AM: This is only a matter of…Like say…see when I filed my EEOC complaint the actually gave me the permission to sue.

ML: Can I see that? AM: They gave me…see the EEOC gave me permission to sue, but the days that they gave me permission to sue between that and the time the decision is due… PO: Yup. AM:…it doesn’t overlap, so, I had to file my papers to keep my, my...what do they call it, my um…my Ability to Sue open. Basically, what is that is, is a 30 day extension. That’s basically what it is; it’s a 30 day extension. PO: Yeah. AM: But, if they don’t have it done by like say if they don’t have it done by the end of next week, yeah I’ll have them in by the week before that. ML: They have to have…they have to have their, uh (Cant hear I think he’s talking about the judge) PO: Judge…. AM: Judge ?Travick*? ML: Yeah, but your uh, you have to have your Workman’s Comp thing out by the 3rd; you have to have in your hand by the 3rd, right? AM: Well the case was closed on July 6th, so he said he has 120 days. PO: Let me ask something. What do you think the ruling’s gonna be? AM: I don’t know, man. PO: You have no idea? AM: Man, I was going through this…I have no idea. PO: Do you think it’s gonna be in your favor? AM: It should be. I was thinking it should have been in my favor every time I went in front of a judge.

PO: But what makes you think it’s gonna be in your favor now? What’s changed? AM: You’ll see. You’ll see, I… PO: Alright.

AM: It’s gonna…if it’s not it’s gonna be great. I don’t care which way, I been out here in the street sleeping out here for 17 years. PO: What do you mean by? I don’t understand what you’re saying…it’s gonna be great… AM: I mean it’s gonna be great. Did you see my website? PO: I did, but you’re saying if they rule…they rule against you it’s gonna be great. I don’t know what that means. AM: I mean if they wanna cause chaos and havoc in their lives, that’s fine. PO: There’s already a ton of chaos and havoc being caused right now, (chuckle) on everybody’s end. AM: This is what I’m saying so if they want to resolve this, they could resolve this. I mean what can I do? What can I do? I can’t do anything. Only thing I can do is…. PO: I think that’s what we’re… AM:…is wait. PO: …here I think that’s what we’re here asking you. AM: ...is settle my case. They have my settlement papers. I gave them my settlement papers. ML: Okay AM: Worker’s Compensation is…

ML: Let me ask you a dumb question though, just I’m gonna put it out there bluntly for ya, if they rule against you, you’re not gonna try anything stupid, right? DT: Hm! AM: Stupid? DT: Oh, that’s what this is about. This is crazy. (chuckle) AM: Come on, man. PO: I’m just asking you. DT: That’s why they’re here (chuckle) PO: No, you’re not gonna do anything of a…criminal nature? Are you?

AM: No, no, no. Stop, stop, stop. I haven’t done anything of a criminal nature since I was ….I’m 46, stop playing. PO: We don’t even know why we’re here. DT: I mean he did his job. You did your job. Let them do theirs. AM: This is why…listen….You’re here because…. PO: As an agent of the State. (chuckle) AM:...You’re here as an agent of the State. But because, Mrs. Obama cared enough to make sure that I stop sleeping on the street. That’s why you’re here. You don’t know why you’re here, because I understand PO: I don’t know about that. She didn’t call me, but, yeah (chuckle). AM: Hold on hold on, No, no, no. This is not funny. You asked me a question… PO: I know AM: This is why you are here; their job is not to tell you why you’re here. You’re job is a law enforcement official. You’re job is to go when the say go and to do what they say do when they say do it. I understand that. I took the oath and I was in there, I’m trained just like you were trained. So if I’m telling you that if there’s people down there in the Justice Department that are concerned and I’m not on the newspaper and all this stuff down in Philly for nothing and I wasn’t out here lobbying for nothing, for 17 years. And people aren’t all of a sudden listening for nothing. PO: Right. AM: And the Justice Department isn’t all of a sudden paying attention for nothing. Paying attention to my website and y’all aren’t all of a suddenly here for nothing. So, I’m not….

PO: Right, you use a good word, when you said concerned. AM: They’re concerned. And all I’m saying is when the First Lady of the United States of America has some of your work in her hand and she talked your words our of her mouth. People are gonna listen. Now if they want to sit up here and sit on their hands a little bit further that’s fine. I don’t care I didn’t care then when it came it time for me to pick up and be a man. I was a man then. You know it’s not easy sitting here being having 2 Master’s Degrees, sleeping on the ground, but now I’m Professor Anthony McKnight. And their gonna respect me as that. PO: Right. AM: I teach ethics in government now. You understand what I’m saying? And I’m gonna sleep on the ground and when I come and I tech to my students, I’ll be sleeping on the ground until the

State of Connecticut fixes my jaw, and give me my money, and they sit there and I could go live in a house, like you two do. Because, you took the oath just like I did. Tell Mastropietro that. PO: This is not a case about he or I… AM: No, I’m not saying it is a case about you all, but just like the two of you are sitting there, you got up out of your house and I don’t know which one of you I telephoned. Which one was it that said they were with their children at church? ML: Me AM: Okay. I think that I should have had an opportunity after providing a service to the State of Connecticut to spend time with my kids, like you do. They prevented that. You don’t understand the havoc that’s caused when you’re laying on your back and can’t walk. And you can’t explain to your wife why you can’t get up and go as a man and go out there for months at a time and do what you got to do and you sit here and you go to your warden and you tell him that you did your job and they cut off your check and they fire you and then you go to the Doctor and the Doctor sit here and say I can’t help you no more, because the Stat’s not gonna pay your bills no more. It doesn’t make you… any any what more what crazy or insane or anything PO: No, I know. AM: ….or anything. It just hurts a little bit…. PO: but AM: …that’s all PO: Mr. McKnight, what I’m saying is there’s still no guarantee that’s gonna happen. AM: It doesn’t matter. I’ve been leaning on GOD for 17 years. Not the State of Connecticut. I mean that’s what you lean on, I lean on God. I don’t care about the State of Connecticut right now. State of Connecticut hasn’t helped me in 17 years. I’ll pay attention to the State of Connecticut when the State of Connecticut sends me a check and a Blue Cross Blue Shield card. And you could tell Mastropietro that. And my retirement papers from the Department of Corrections, please, when you get time. That’s what I need. You could talk to Helen Kemp. I mean this has nothing to do with anything else. You could tell Mastropietro, you know. I…he was in there when Frankl was in there and if he sent you here he knows what I'm talking about. I have his report right here he knows exactly what I’m talking about. PO: I think we have as many questions as you do because this is as …because this is as concerning and questionable on our end on everybody’s end. For # 1 we don’t even know why we’re here. #2 We don’t know why this has gone on for so long. AM: (chuckle) Exactly. This is what I’m saying. That’s the beautiful thing about it. That’s what I told the lady last week, “You can’t even help this situation.” PO: But and he’ll agree

ML: That’s the thing…. PO: We been here talking…We been here talking for a while, I feel like I’m more confused now than I was before we met.

AM: Well, did you look at the file?

PO: I looked at the file. It says you failed to show up for work and they kept trying to say to you, ‘you gotta come back to work, you need documentation or you’re gonna be fired and then you’re fired. Like I…that part I don’t get. AM: The Doctor. I just showed you the paper…. ML: Yeah. AM: That’s the Doctor. I’m out on Worker’s Compensation. Do you understand what I’m saying? ML: Now, what was the date you got hurt? AM: April, I got hurt April 26 93, right before the Laws changed and all that. PO: But, okay, so you’re out on Workman’s Comp, but ML: It took you a year to get that though, right? AM: No, no, no. I went….I was going and what happened in the jail was short and we were running like 15-20 people down a shift and what they would allow me to do was like do visiting, you know you, do visiting stuff like that…. PO: Aright, so…. AM: You know and then… PO: You get hurt on the job and you’re like off and you’re home hurt…. AM: Yeah. PO:….at then, at then some point do they say to you: either your injuries are not consistent with being Workman’s Comp or yeah you’re not hurt enough…you need to come back to work. And you say I don’t agree with that. Is that how that worked? AM: No, they actually sent me the paperwork saying: Here’s your paperwork saying you were injured on the job by an inmate and your claims have been accepted. PO: Did the Doctor say to you…you can…I’m giving you a note to stay home, or?….

AM The Doctor said…The State Doctor said, “Given your injury, you can no longer perform the duties of a Corrections Officer. ML: Okay, now at the time did they have a light duty station? AM: No, ML: okay AM: then they sent me a letter… ML: Yup. AM: ….saying we do not have any light duty for your disability. ML: Okay. AM: I got that letter. ML: So, what did you do? AM: What do you mean what did I do? ML: Well, can I…I’m just saying, when we get hurt we don’t have any light duty status, either. So let’s say if we get hurt, but we’re ok to work, but we can’t work our job… AM: Yeah. ML: Theoretically, your Workman’s Comp, we have to go out and look for a job. AM: Yeah, I went back to school. ML: Okay, so you did that though?.... AM: Yeah, I do all that. ML: …you went… ML: Alright. I’m just trying to figure out why they denied this though. PO: That’s what we’re trying to figure. We don’t understand. AM: Cause they are corrupt. ML: What, what did you do…I’m trying to see what didn’t you …what obligations didn’t you do…. AM: There was none. The Commissioner didn’t say that. The Commissioner says you qualify.

PO: But the letters in the file say you need to come back, you need to call us you need to come back to work. AM: They fired me. There was no come back to work. PO: Because you didn’t come back to work, they fired you. ML: Now let me ask you a dumb question though…. AM: Sir, they said that we have no work. You have to apply for …for light duty work. I applied for the duty work. If you read my file, you’ll have the letter that says, “We have no light duty to fit your disability. PO: Right, well… AM: It’s in there. PO: What you’re saying…you weren’t forced to do light duty that’s what I’m saying... AM: No, they wouldn’t let me back in the facility to do any light duty or anything. Do you understand what I’m saying? PO: No, actually I’m confused because… AM: I mean if I’m…if you have a facility, like say if that was a jail and this was Personnel out here and Human Resources not attached to the jail, I applied for all those jobs. PO: Right, but, the thing is…. AM: Every Corrections Officer job. PO: The Doctor was saying to you, you were not well enough to do that basically….Right? Or no? What did the Doctor say? AM: The Doctors were saying I need further medical help…to, to…for my injuries. That’s what the Doctors were saying. That’s what the State Doctors were said, the Worker’s Compensation Doctor said and that’s what my Doctor said. PO: So, that means, you would have been able to just stay home and not have to do anything and collect and you’ll be okay. AM: Yeah. Basically. I could stay home and and…. PO: So, what was the light… AM: They wouldn’t give me any light duty. They could have gave me a computer. I’m a teacher; they could have let me teach G.E.D. They could have gave me anything. I mean they could have let me sit out there and push Personnel and Administrative files. I’m pushing them now. That’s why we’re here.

PO: But, what I’m saying is, were you well enough to do any of those jobs? AM: I don’t know. PO: Or no? AM: They said I wasn’t. The State said I wasn’t. PO: Okay, so, that’s fine. You’re not well enough to do any of those jobs. AM: That’s what the State said. PO: So, why are the letters in you file saying you need…The Doctor says you need to come back to work? I don’t understand. AM: The Doctor didn’t say I need to come back to work. PO: The D.O.C’s file says that in talking with the Doctor, you were o- you need to come back to work.

AM: No. You’re not reading the same files… PO: I, I. AM: The last letter…that letter I just gave you was the last Doctor’s letter and what does it say….he’s in need of what further medical help. I would like to see what you have. DT: Yeah, they’re reading all you papers. AM: Yeah, let me see what you got. PO: I’ll read it to you. February 3, 95. It says, Mr. McKnight, from Mitch Drabek… AM: Yeah. PO: …this is to notify you that you have been on Unauthorized Leave of Absence…. AM: Since when? PO: Since August 7, 94 AM: That’s what the letter of the, uh…. PO: It says, “You were forwarded a letter by Linda Fowler, Personnel Officer dated the 6th of December notifying you of your status and that according to State Regulations you are to submit medical documentation concerning your absence and submit in writing a request for leave of absence indicating start and ending times. To this date information has not been received.

AM: Doesn’t that sound crazy. To you… PO: I, I AM: You’re an officer. You’re an investigator, right? PO: But, where AM: Doesn’t it sound crazy? I mean it should sound crazy. PO: But why didn’t you submit the documentation?

AM: I did. I just let you read it. ML: That was the one you submitted? AM: Yeah. The Doctor said I need further medical help. They don’t ….whatever…they were giving me unauthorized….I don’t know, don’t ask me why. PO: In that letter and you and you were like….Oh my G-d they didn’t get it. Why didn’t you go there and say listen, I’m…talk to her. AM: People were camping outside my sister’s house… People were following me in cars. PO: Oh, okay. AM: People were calling me calling me Nigger. The Attorney General was calling me at night at 9 o’clock just putting a bead on me with a car parked outside my sister’s window. You’ve got to be kidding me. You have no idea what I’ve been going through. PO: I’m just reading the facts. AM: Oh, you’re just reading that, but even if you’re reading that…. PO: You’re telling me something that… AM: If you’re reading that and you don’t understand that you cannot be on Unauthorized Leave of Absence after you’ve been determined to have a work compensable injury, then something’s wrong. PO: But, but in your file the documents are not there, what they’re looking for AM: I don’t know what they’re looking for, I mean there’s things in my file that shouldn’t have been in my file. Let me show you this. ML: Is that yours? AM: This is…what’s that? Yup, that’s mine…. Where’s the other one?

PO/ML: That one? AM: Yeah. Let me help you, because I thought you had all the papers. I’ll show you what significant, as far as, what they didn’t do. And you tell me what, what you think about it. Here’s a letter on 12-6-93 when I was out on Worker’s Compensation, that’s when they took all of my, uh, benefits. You can’t do that when someone’s out on Worker’s Compensation. This is when they stopped paying the Doctor’s bill. When they stop paying the Doctors bills you can’t get any treatment. And this is the one you’re probably looking for; I don’t know where that came from. That’s a Separation of State Form. They gave me this last year from Helen Kemp and them, it was in my file. We have, we have until this day they don’t know how it got there and Attorney General Hixon-Smith will tell you she doesn’t know how it got there. PO: Signed following medical leave of absence. AM: Yeah. You need to do a fingerprint analysis…a...I mean a hand…. PO: This is a fraudulent document. AM: …look, look, see who…if you could get Donna Hixon-Smith and Dianne Pierpont to write that down like they do on television and see whose hand writing that is DT: Get you paper back. PO: This is your letter, right? AM: That’s mine. ML: But you’re resigning. (?) PO: You resigned. AM : No, no. I said this listen…Come on… PO: That’s the letter that’s AM: Where’s the other one? PO: The letter of resignation. AM: Look. ML: Effective Date to be determined.

AM: Yup. They sent me this letter saying I was on unauthorized leave and Mitch Drabek sent me that letter. I said I’ll resign when you get my paperwork, my retirement paperwork. They never produced the retirement paperwork and …and Helen Kemp and this woman right here…. PO: But why would you even write this?

AM: Because, they asked me to put it in writing. They said put something so that we have good faith that you’re willing to leave State Service. I said here, it’s no problem. It’s no problem. I don’t have anything to hide. ML: And they took it as you resigned though. AM: You can’t take it as I resigned, because the requirement for leaving State Service, when you’re injured is retirement. Don’t you understand what I’m saying? This is what I’m saying. PO: Yeah, but, I, but I could walk into the Department today and give a letter and say I’m resigning. AM: But, you can’t leave State Service till you go to Hartford and retire. ML: Til you fill out that form? AM: Right. PO/ML?: So you never filled out that form? ML: That was just in you file? AM: There you go. And ask this woman right here. Wait, where’s the Helen Kemp letter? Call her. Call her and she’ll let you know everything you need to know. Everything you need to know, she’ll let you know. She’ll even tell you I’m right. She wrote me like 10 times already. She’ll tell you I’m right and she’ll tell you there’s nothing she could do, because of what they did. She’s the only one on my side for real, for real that that actually understands what’s going on. And you could even see this, if you want to. Like July, July 23, 1993 that’s when the Law passed. I got in…I got injured April 26, 1993. So you should see the difference in what they did and what the Law says is supposed to happen. That’s the Law concerning how they were supposed to treat me and now you see me sitting here without any of that. So, obviously they didn’t treat me…I don’t know….be quiet, be quiet. Here’s the other… here’s the rest of it…the Law concerning Blumenthal and them know this…this also the Law and the administrative procedures that the State of Connecticut is supposed to use when dealing with an injury with somebody from the from the State Department of Corrections or the State Police. They didn’t do this either. When you get...when you get injured on the job the Stat is supposed to proceed with you Life Insurance policy, your Health Insurance Policy, and all these different issues that’s gonna come up in your life, because when you get paid they take, uh...oh, you’re going to enjoy this one…hold on…you want to see a good letter. You want to see somebody trying to fraud somebody…here you go. Oh, this is lovely. This is the one by Dianne Pierpont sent me back in, uh….199-uh whatever it says on it. That’s great. Oh, we want you to sign this, do this. Yeah, sign your life over, so we could really screw you around. Read those. Oh, they’re beautiful. I got so many letters, there’s some more that I could, uh, bring. I didn’t want to cloud…you know bring you too much. I got boxes of this stuff. And here you go, this is from Helen Kemp. This is the 2nd letter, I think, she sent me. I have the August 18th letter she sent me, but that’s the 2nd one, as far as, my retirement. Where the first one she actually lists the different, uh, here she lists the Date of Service and everything else. But the first letter, she actually tells me that I was terminated on…in May of 1994. So, I was terminated and peep this now, I was terminated before the Doctor stopped seeing me. That April, that August letter, of August 7th 1994

is post the day I was terminated. Here’s the check, too. I’m gonna give you the check. You’ll want to see…I don’t know if you saw this in my file or not…. (PO blowing breath) AM: But this is actually my termination check. This is my termination check. This is a…This is beautiful. Now, they wanted me to cash this check. I want to…I want to show you exactly what I’m talking about, as far as, the termination check. People don’t believe, I mean, I’ve been giving people these documents for years and they’re like you gotta be kidding me, nobody did this to you. They wouldn’t do this, this is like illegal. I was like, ‘yeah, it’s illegal’. PO: Who’s saying that? AM: Lawyers. PO: What lawyers? AM: Who was it? Kent, um…. PO: Did you retain them as attorneys? AM: No, because the wanted me to sign…um…temporary total benefits packages. I didn’t want temporary total benefits. I want 5-142 benefits. Just like Mr. Cozzolino and them got. Here’s the…here’s the check. Last paycheck and here’s the other check. This is a fraudulent check, too. That’s the one the Roland Administration sent me for 20,000 bucks, I didn’t cash it. You’ll notice the date on that check right there that I’m showing you is the same one that corresponds with the dates of my termination on the Helen Kemp letter. It’ says you were terminated on May such and such of 1994, that’s the last check. That’s the check right there they sent me to sever State Service. That goes along with that Di…Dianne Pierpont letter that I just showed you. That check right there they sent me that when they sent me the Dianne Pierpont letter. So, if I was in fact to sign that letter it would have been stating my injuries didn’t occur while I was at the Department of Corrections….(silence)…I mean it’s amazing to me that they even do this kind of stuff. I’ve got an MPA in Government. This is crazy. Honest to goodness. It’s crazy. (silence, police conferring) Yeah you could give me those. PO: These are all yours, right? AM: Yeah. PO: I don’t know…I still think… AM: (chuckle) Tell them to send me a check because it’s not gonna be worth it…sending a check all those other people they got to…. PO:…I still feel… AM: …they gotta send a check

PO: …like I’m missing something from A to B…still seems like there’s something wrong with the initial part of this thing. AM: Okay. PO: Where, where….and whether it’s on your end or not, I don’t know. But, I don’t understand the letters saying, ‘We don’t know…where are you? Why haven’t you come to work? AM: Who? PO: D.O.C. We’re gonna… AM: What do you mean come to work? It didn’t say come to work and see me about… PO: It says unauthorized…. AM: this disciplinary action. That’s not work. I’ve been going to…Listen to this…On Grand Avenue they had the Personnel Department. Now I’m gonna ask you this. If somebody screws you around once, okay. If somebody screws you around twice, what are you gonna do? I’m not gonna let you screw me around 3 times. PO: I just think that if I got a letter saying, ‘If you don’t come see us we’re gonna fire you… AM: They already terminated me. The letter was moot. Do you know what moot means, in a Court of Law? It means it doesn’t PO: I don’t…no… AM: really matter after the fact. PO: I still would have, I still would have taken steps to be like, “Listen have you not got my doc….I don’t know. AM: I mean if I see somebody over here and he’s shot 50 times over there, I’m not gonna go run over there and chop his head off.

PO: What does that have to do with anything? That means nothing to me. AM: okay. PO: (talking fast, upset) No, do you understand…do ya understand....you’re telling me these stories that have absolutely nothing to do with this case. Nor, does the other Corrections Officer that got his benefits…a…it that… AM: It does have to do with it. PO:…it’s not the same case. AM: It doesn’t have to be the same case, sir. It doesn’t have to be the same case under the Law.

PO: Aright, so…. AM: In Public Administration, if you have two of the same substances that go through the same process, you should have two of the same outcome. Just like any science, 1+1=2. If Johnny goes…if Johnny works for the State of Connecticut… PO: So… AM: ….who’s a white officer and a inmate breaks his leg and he can’t do his job and Johnny gets his benefits. And then, Anthony, the B officer who happens to be Black, gets his leg busted by an inmate he should … PO: Al right, right so…. AM: …get his benefits to PO: …here we go though back to the issue. Is it an issue of documentation? Is it an issue of harassment? Is it an issue of race? What is the prime issue that’s going on? Or is it all of the above? AM: I’d put all of the above. . PO: I mean to me that … AM: I’d put all of the above…. PO: …to me, to me that AM: I’m gonna say… PO: to me…. AM: ...that in my… PO: …that sounds like you’re on somewhat of a fishing expedition. AM: I’m not on a fishing expedition. PO: Because, you’re saying… AM: I don’t, I don’t PO: everyone in the world there is out to get me, it’s not just… AM: Somebody is out to get me, I didn’t say that. PO: Well you made it sound like…well you made it sound like the D.O.C. specifically targeted you. AM: well, I’m saying this, let’s put it…let’s put it plainly. They didn’t do their job. I did my job…. PO: But they did, but they did… AM: …They didn’t do their job.

PO: But you’re saying they did their …. AM: ….No, they did not…. PO: …job for the white officers. AM: …Yes they did do their job for the white officers. The, the white people in the Personnel Department processed Mr. Cozzolino’s paperwork and they didn’t process mine. Why would you not do your job? You do not have the ability, as a Public Official... PO: No, I don’t know… AM: …to elect which packages you put through….not. PO: I don’t know, because… AM: Now we’re gonna find…. PO: Are you able to proooove evidence of that based on your... AM: I’m gonna… PO: …race? AM: I’m gonna prove my case. I like my case. Just like how you say you like your case, I like my case. ML: Did you do what she asked you to do in this though? AM: What’s this? Which one…. ML: ‘Cause she says AM: are you looking at? ML: …the 2009 one from Helen Kemp. AM: Yeah. ML: Did you…Did you do that? AM: Oh yeah, we did all that. ML: What’s that? AM: Yeah. ML: Okay, so that’s all set? AM: No, it’s not all set, because they wouldn’t do their job. ML: No, no, no.

AM: That’s what she’s asking me. ML: You are informed that you do not submit your retirement paperwork directly to us… PO: Right. ML: …ok….you have not done this. So she says today that retirement… AM: That’s September 2009, now. ML: I know. That’s what I’m asking you.

AM: It’s been done three times. ML: okay. That’s what I’m asking you. AM: It’s been done with them again. It’s been done with D.A.S. directly and it’s been done with Department of Corrections directly, uh…. ML: Okay. AM: Uh, what was her name? Nora Ryan, DOC, John Bishop, DOC. Who else? Who else do we have? DT: Karen in the Worker’s Compensation. AM: Karen in the Worker’s Compensation. Well, they have all the paperwork…. ML: Yup AM: The documents. But, see I’m gonna say this before you go and ask them any questions. ML: Yup. AM: There’s a difference between… ML: Yup AM:…Hazardous Duty Retirement… ML: Yup AM: …and disability retirement. Okay. Let’s make no mistake. There’s a difference between disability retirement and Hazardous Duty Retirement. Now, when you get injured on the job and you file you retirement paperwork, you’re entitled to Hazardous Duty Retirement. Okay, the issue with DOC is they do not want to give me a Hazardous duty retirement. They want to give me a disability retirement. Therefore, they do not want to give me credit for service, for the time that I was injured. You understand the issue now. That’s the legal issue. And that’s what this letter states and that’s what’s before the Worker’s Compensation Commission. ML: Okay, so the bigger thing is…they’ll give you disability retirement, you don’t want that. You want your Hazardous Duty….

AM: I want the same Hazardous Duty Retirement….hold on. I didn’t give you this one. This is what I want…so you could simply know what I want here. So there…I mean you can’t…you can’t misinterpret this. Let’s see if we could find his papers. It might be in here. Here you go. Now this is the one that should clear up everything for you…’cause I can’t believe they didn’t give you this stuff before you came down here. ML: Some of the stuff we have... PO: There’s files. ML: …there’s files the… AM: No, but read the Hazardous Duty part…the retirement. I don’t car about the money he got…who cares…God Bless him. If he could get another million…get another million if he could. (chuckle) It don’t affect…it doesn’t matter how much he go. The fact of the matter is process. They processed his paperwork and that’s a matter of process, right there. Not benefits. It says right there on the paperwork. And Helen Kemp said so and she’s an attorney for the Comptroller’s Office. The actually processed his paperwork. The same one…I mean this is amazing. I mean you’re a detective. You’re gonna love this one. You want to see some fraud in government. Courts. Your court system and all this stuff. People you work for. This is great. This is the best part of it all right here… (chuckle) This is part of it. Here’s the Commissioner Delaney….I circled it for you at the bottom…down there. That’s what he said May 5th at the hearing that we had. This is great. This is actually a judge saying that, now. I’m asking him for the benefits. My 5-142 Benefits. And he’s telling me Mr. Cozzolino got his benefits and he approved them. He’s the guy that approved them. And all I’m saying is in 1998 when he was a PreFormal Trial Judge on my case, why not approve mine? Same issue. It’s the same issue and mine’s is better than Cozzolino’s because mine has a Judge and the Appellate Court stamp on it, that I actually was injured while at work. (silence) Don’t worry. I can’t explain it either, but it’s there…it’s actually there…actually did it…here hold this for me. Let me show you. The Judges…that’s one….that’s one of the Judges. But I want to show you what the Court Judge said…here you go…..(silence) Now this is the….you see the rationale that...that, that judge gave…now listen to this…. ML: well… AM: go ahead, ok…go ahead. ML: Well what I’m reading here is he knows Cozzolino’s case, he said he dismissed part of it. AM: Part of it… ML: …and he says AM: But he granted him the part that gave him his 5-142 Benefits. Go read Cozzolino's case.

ML/PO?: Well I’m gonna have to….heard of it but…. AM: Yeah, because…I, I want those same benefits. ML: Well, he says, the Commissioner says, “As I recall I’m intimate with the details of the case. Why, because that, …why is this applicable to your case? “I mean the case is different. Each case is different. Is what he’s saying to you. And you said it’s not applicable to the point where the case is in any way having to do with my case…

PO: Correct. ML: Right. But what I’m saying is you both are C.O.’s and you both got hurt. AM: Right. ML: Okay. AM: The Law requires the same entitlement. ML: Correct. AM: He got his 560 weeks. I didn’t. I got fired. That’s the issue. ML: And all he’s saying is…is they’re different. They’re different cases. AM: The Law doesn’t see it that way. The law sees it as; you’re entitled to these benefits. ML/PO?: Well the facts of the case are gonna…may have been different. They may have been filed…the filing has nothing to do with that. AM: No. Listen, listen, listen…to this. The claimant suffered compensable bodily injuries on these to dates…ready? ML: Yup. AM: Which claims remain open under chapter 568… ML/PO: ok AM: and under which the claimant may seek recoveries for further benefits, such as, this, this…this…this. Right. ML: And that’s for his case or yours?

AM: This is my case. PO: okay AM: Now where’s the 5-142? (silence) This is a case that was filed under 5-142. Where did the 568 come in at? We don’t know. And then here you go again. Look at the benefits I am applying for. 5-142. My retirement benefits. 5-169(i), which says I get credit for service of being injured while at work. ML: Yup. AM: This is all I’m saying. Where is it? These are Judges. I mean this is the Law. This is Case Law. I mean I’m just asking for what I am due under the Law. I didn’t ask for anything else. There’s nothing I asked for that wasn’t under the Law. They violated every administrative procedure you could shake a stick at. Every One. I mean they just totally obliterated the administrative process. They have no kind of ethics, as far as, doing administrative paperwork. You just don’t do that. I mean I’m taught not to do that

ML/PO?: So… AM: I teach people not to do that. PO: So you know that letter that you just showed from the Judge, about saying that right now you don’t have enough facts in the case? AM: Mm-hmm. PO: Had you…have you given him this stuff yet? Or no? AM: No, no. PO: Well don’t you think that would be a good idea to like start giving him all this? AM: I’m gonna take care of that. I’m waiting for…. PO: Yeah... AM: my November 2nd decision. Don’t worry about it, all… PO: I’m I’m... AM: I’m doing that. PO: I’m not worried either way. Listen I’m just saying to you…. AM: I’m taking care of that. PO: I’m just asking you the question that … AM: I’m trying not to do it. PO: I’m telling you AM: I’m trying not to do it. I’m hoping that they give me my benefits. You know how much this costs to do when you’re homeless? PO: Oh okay. Right. I’m sure it does. AM: This is what I’m saying. If they give me my decision…. PO: Just make sure, I know you’re an intelligent man….just make sure you provide them with all this stuff. AM: …next week Oh yeah, they got it already. Remember when I told you in 1995… PO/ML: The Judge….the Federal Judge. AM: Well, the Federal Courts, they got it. No, they brought it back from um…Roxbury, Mass. Where the Federal Warehouse is at, where they hold… PO: That’s fine.

ML: Okay. AM: …the cases or whatever. But the case from 1995 has basically the same… PO: Alright AM: issues. I’ll just, you know, but yeah…tell ‘em…uh, hey I’m waiting for a letter that says here’s your check and here’s your Blue Cross… PO: Listen, again… AM: …and here’s your retirement papers. (heh-heh) PO: Again we’re telling you… AM: I could do better than this. I don’t need this in my life. PO: We’re telling you today that (chuckle) this is not… this is not a criminal…this is not a criminal matter, like so we’re a little amassed as to why we’re even here. (chuckle) AM: I don’t know why what…they… No, I don’t even know why you’re here myself. But, I think the process of why you’re here is Roland. When I filed those papers with Roland, they said, “It wasn’t a criminal matter,” Oh it’s just this that and the other thing. Then the next thing you know the dude sitting here…I’m running the hell out of Connecticut and they’re putting handcuffs on this dude. (ha ha) Yeah. ML: So… PO: Alright. AM: This is all I’m saying…I,I…you don’t know where these things are going. PO: No, it’s…I’m, I’m very… AM: I don’t know if they got, I don’t know if these guys…what kind of…they…and listen to me…if they could sit here and stall this for 15 years, they’ve got some hocus pocus up their sleeve. PO: (sigh) I’m very, very confused. AM: You should be and you should go back and tell them, “Hey, I’m very confused about this crap”. PO: I’m gonna, I… AM: You’re supposed to be out there catching the bad guys out there. PO: Well that’s…that’s…yeah, but that’s…that’s here it is…there it is… AM: This is Administrative Law. That’s what it is. PO: Yeah, but we don’t do administrative (ha ha)…. AM: Y’all don’t do…but, I’m saying Administrative Law is criminal. DT: Yeah, that’s true.

AM: You see these guys in…in New York and them going to jail. Somebody has to do this kind of work… PO: No I, I…yeah I get that part, but that still necessarily wouldn’t be our, our division. But, AM: Right. ML: Well, I appreciate you coming down. AM: I don’t know, I just hope… PO: I think…I think…Well nothings gonna happen til the decision’s rendered now, right? You’re gonna wait for that? AM: I’m…I’m…they yeah…see what I’m waiting for is the OPEB, the Executive Order 38. I don’t know if you, uh, Post Employment Benefits Commission. The thing everybody’s going crazy about, pensions and all this stuff… ML: Yeah. AM: …I initiated that. I got it in here, too. But it’s supposed to be for the benefits like me that people got shoved through the cracks… ML: Yeah. AM: …over the last 16/17 years. That’s what OPEB is about. And what they’re trying to do is mitigated their losses now. Because, not only do they have to pay back the benefits they have to pay back the interest… ML: Yup. AM: …so this is what’s going on now and this is why the budget is getting so out of whack. Even though, they might technically owe 9.4 billion, when you throw the interest up there it goes up like 13/14 billion and that’s billion…. DT: in liabilities AM: So the liabilities go up. And this is what Governor Rell and them are waiting for. They’re waiting for the election. So they could just get this thing out of the way. People stamp these papers next Tuesday… ML: Oh yeah. AM: …There will be no more Anthony McKnight. Hope fully somebody comes down and send me my papers in the osmosis thing or something…I don’t know. PO: I don’t know. ML: I appreciate you coming out. PO: I appreciate you talking to us. AM: Hey man, no problem. PO: Do you have a point of contact?

ML: Oh, so any other way I can get a hold of you? Or just that cell phone number? AM: No, this is her telephone number when I come to New Haven, just contact her. PO: We’ll just call and leave a message? AM: Yeah, she knows how to get in contact with me in Philly. PO (to ML): He has your number and everything too, right? ML: Yup. AM: Yeah I got your card. I got your card. I hope not. I hope next time it will be a check and my retirement papers. And bring Ms. Nora Ryan and them down, we could sign them right here. I’m not going up there. I told them I’m not going through (a gate?) I don’t trust those people…won’t go up there. They asked me 2 or 3 times. I won’t go see them. They done did me dirty for the last God knows how long. ML: Alright…appreciate you coming down.

APPENDIX G

APPENDIX H

APPENDIX I

APPENDIX 119

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Table of Contents
EXECUTIVE SUMMARY

........................................................................................................................ 4

................................................................... 4 ......................................................................... 5 STRATEGIES FOR FOR CONSIDERATION FOR ADDRESSING CONNECTICUT’S POST EMPLOYMENT BENEFIT LIABILITIES AND COSTS ............... 6
LIABILITIES AND COSTS RELATED TO CONNECTICUT’S RETIREMENT SYSTEMS CAUSES OF UNFUNDED LIABILITY FOR SERS AND STATE OPEB PLAN

INTRODUCTION ............................................................................................................................... 9
COMMISSION MEMBERS

...................................................................................................................... 10 ................................................................................................................ 11

COMMISSION’S APPROACH BACKGROUND

................................................................................................................................ 12

............................................. 12 ...................................................................................................... 12 DESCRIPTIONS AND DEFINITIONS OF ACTUARIAL LIABILITIES AND CALCULATIONS .............................................................. 13
LEGAL AND COLLECTIVE BARGAINING FRAMEWORK RE STATE EMPLOYEE RETIREMENT S YSTEMS 2009 S TATE AND SEBAC AGREEMENT STATE ADMINISTERED PENSION PLANS

.................................................................................................. 15

........................................................................................ 15 ........................................................................................... 15 Teachers Retirement System (TRS).................................................................................................... 17 Judicial Retirement System (JRS) ...................................................................................................... 17 Alternate Retirement Program ..................................................................................................... 17 FUNDING HISTORY AND FUTURE PROJECTIONS FOR SERS ................................................................................... 18 June 30, 2008 SERS Actuarial Valuation; Projection for June 30, 2010 ..................................................... 18 Actuarial Accrued Liability among Tiers for SERS ..................................................................................... 18 CAUSES OF GROWTH IN SERS UNFUNDED LIABILITY AND LACK OF FUNDING PROGRESS ..................................................... 18 PENSIONS: COMPARISONS TO O THER S TATES, MUNICIPALITIES AND PRIVATE SECTOR ........................................................ 25 Connecticut’s Pension Funding Ratios ................................................................................................. 25 Connecticut’s Pension Plan Provisions ................................................................................................. 25 Connecticut Municipal Pension Plans .................................................................................................. 26 Private Sector Pension Plans ........................................................................................................... 27
OVERVIEW OF STATE ADMINISTERED PENSION PLANS State Employee Retirement System (SERS) STATE OTHER POST EMPLOYMENT BENEFIT (OPEB) PLANS OVERVIEW OF STATE ADMINISTERED OPEB PLANS

.......................................................................... 28

.......................................................................................... 28 State Employee OPEB Plan ............................................................................................................ 28 Retired Teachers Health Plan (RTHP) ................................................................................................. 29 STATE OPEB ACTUARIAL ACCRUED LIABILITY AND ARC AMOUNTS .......................................................................... 29 BREAKDOWN OF OPEB ACTUARIAL ACCRUED LIABILITY ...................................................................................... 30 IMPACT OF STATE AND EMPLOYEE CONTRIBUTIONS ON DISCOUNT RATE AND TOTAL LIABILITIES .............................................. 32 HEALTH CARE COSTS AND T RENDS .......................................................................................................... 33 OPEB: COMPARISONS TO O THER STATES, MUNICIPALITIES AND PRIVATE SECTOR ........................................................... 34 State OPEB Plans and Provisions ...................................................................................................... 34 Municipalities and the Private Sector .............................................................................................. 35

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IMPACT OF PENSION AND OPEB LIABILITIES ON STATE’S BUDGETARY AND FINANCIAL OUTLOOK AND CREDIT
RATINGS

....................................................................................................................................... 36 .................................................. 36 ....................................................................................... 39 ................................................ 40 ............................................. 41

STATE PENSION AND OPEB COSTS AS AN INCREASING PORTION OF STATE E XPENDITURES IMPACT ON FINANCIAL OUTLOOK AND CREDIT RATINGS

ACTIONS TAKEN IN OTHER STATES REGARDING PENSION AND OPEB LIABILITIES

POTENTIAL STRATEGIES TO ADDRESS PENSION AND OPEB LIABILITIES AND COSTS
PENSION PLANS

............................................................................................................................... 41 Overall Strategy ........................................................................................................................ 41 FUNDING STRATEGIES ......................................................................................................................... 42 Paying the Annual Required Contribution (ARC) ................................................................................ 42 Calculating the ARC .................................................................................................................... 42 Employee Contributions to the Fund .............................................................................................. 44 Pension Obligation Bonds .............................................................................................................. 45 PLAN DESIGN AND BENEFIT MODIFICATION S TRATEGIES ...................................................................................... 47 STATE OPEB PLAN ............................................................................................................................ 52 Overall Strategy ........................................................................................................................ 52 Prefunding in a Trust Fund ............................................................................................................. 52
CONCLUSION APPENDICES

................................................................................................................................. 56

.................................................................................................................................. 57

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Executive Summary
Governor M. Jodi Rell established the State Post-Employment Benefits Commission (the Commission) through Executive Order #38. Although Governor Rell recognized that pension and other post employment benefits (OPEB) consisting mainly of retiree health insurance, play an important role in attracting and maintaining a skilled and capable work force, she highlighted the growing impacts of the unfunded liabilities and costs related to these plans on the State’s budget and finances. The Governor charged the Commission with delivering a report that: Identifies the amount and extent of unfunded liabilities for pensions and other postemployment benefits; Compares and evaluates the advantages and disadvantages of various approaches for addressing unfunded pension liabilities and post-employment benefits; and Proposes short and long-term plans for addressing unfunded pension liabilities and postemployment benefits. The Commission reviewed actuarial valuations, collective bargaining agreements and other information regarding Connecticut’s retirement systems as well as research reports and articles addressing these issues. The Commission also obtained actuarial estimates of liabilities and various approaches to how they may be addressed. Liabilities and Costs Related to Connecticut’s Retirement Systems The State’s pension plans include the Teachers Retirement System, the Judicial Retirement System, and the State Employees Retirement System (SERS) all of which are defined benefit plans. SERS covers the majority state employees and retirees as well as members of the General Assembly, constitutional officers and the Governor. Additionally, The State administers a defined contribution program for some higher education employees. The State also sponsors the State OPEB Plan (primarily health benefits) and the Retired Teacher Health Care Plan. The Commission focused on the SERS and State OPEB plans.
As of June 30, 2008, Connecticut’s unfunded liability for SERS was $9.2 billion and $24.6 billion for OPEB, a total unfunded liability of $33.8 billion. Consider that Connecticut’s current year general fund budget is $17.6 billion. Connecticut’s 2008 funding ratio for its State-sponsored pension plans (plan assets as a percentage of plan liabilities), according to the Pew Center on the States, was the fifth lowest in the country. A November 2009 report by the Center for State and Local Government Excellence, indicated that Connecticut’s unfunded OPEB liability was the third highest in the country Connecticut’s unfunded liabilities have lead to increasing costs consuming a growing percentage of state expenditures. In fiscal year 1992, the annual costs related to SERS, TRS and OPEB were 5.57 percent of state expenditures. They are projected to be 11.24 percent in the current fiscal year. If this trend continues, the percentages will grow to 13.7 percent in 2021 and almost 19 percent in 2032.

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Causes of Unfunded Liability for SERS and State OPEB Plan State Employee Retirement System (SERS)
The SERS plan has historically been underfunded, in part because, until the 1980’s, it was funded on a pay-as-you-go basis. Indeed, the 2008 funding ratio of 51.9 percent is just slightly higher than the 1992 ratio of 51.4 percent, despite a decision to begin funding the Annual Required Contribution (ARC).

There are a number of reasons for a lack of progress with the SERS funding ratio. The Level Percent of Payroll method of calculating its ARC tends to have lower amortization amounts in the earlier years of the schedule. More importantly, interpretations applied to the 1995 and 1997 State and the State Employee Bargaining Agent Coalition agreements (SEBAC IV and V, respectively) have included annual reductions to the ARC. These reductions totaled over $105 million in fiscal year 2011. Moreover, reductions in the ARC payments of $314 million were included in the 2009 State and SEBAC agreement. The result is a heavy back-loading of the amortization schedule, resulting in a stagnant funding ratio and a growing annual ARC. Some other reasons for a lack of funding progress include the 2009 and previous retirement incentive programs and the plan’s assumed actuarial investment return. SERS, like most plans, was hurt by the severe market downturn in 2008, the main cause of the projected funding ratio decline to 46 percent as of June 30, 2010. Historically, Connecticut has responded to concerns about unfunded liabilities by creating new tiers, as opposed to modifying existing tiers. SERS consists of three tiers: Tier I for those hired before July 1, 1984; Tier II for those hired from July 1, 1984 to June 30, 1997; and Tier IIA for those hired on or after July 1, 1997. According to the June 30, 2008 actuarial valuation, $14.3 billion of SERS total actuarial accrued liabilities of $19.2 billion are attributable to current retirees and Tier I active employees. This portion of the plan’s liabilities would likely not be impacted by plan modifications given the legal issues involved. Compared to other New England states, the annual payments as a percentage of final average salaries are lower for Tier II and IIA plans than the other states. The required employee contributions are lower in Connecticut as well. Connecticut’s reductions in benefits related to early retirement are generally less than found in other New England states. State Other Post Employment Benefit Plan (OPEB) The challenge with OPEB for Connecticut and many other states is that the difference between the ARC and the pay-as-you-go amount (which is the amount Connecticut has been paying) is very difficult to fund from a budgetary standpoint. In 2008, the ARC was $1.65 billion. The actual amount paid for benefits was $.464 billion. Difficult as it is, continuing along the payas-you-go path will subject the state to continuing growth in these costs as a result of health inflation and a growing number of retirees. From fiscal year 1999-00 to 2008-09, these costs increased from $173.9 million to $452.0 million, or 11.2 percent per year.

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As noted, Connecticut’s OPEB liabilities are high compared to other states. The three main reasons for differences in per capita OPEB liability amounts are: 1) benefits levels and plan costs; 2) population covered; and 3) funding policy. In Connecticut, a high cost state, employees who work at least ten years are eligible to receive full comprehensive health care coverage for themselves and their dependants when they begin receiving retirement benefits, with 55 being the early retirement age for non-hazardous duty employees. The premium shares are minimal, ranging from zero to a maximum of three percent. Unlike pensions, once vested, the level of benefits received is not tied to the number of years of service. The Rule of 75 (years of service plus age) in the 2009 SEBAC agreement will delay when affected employees (those with less than ten years of service as of July 1, 2009) can begin receiving retiree health insurance.

In regard to funding, most states, like Connecticut have zero or few assets in their OPEB plans. The 2009 SEBAC agreement, however, included a provision that involved a 3 percent of salary employee contribution during the first ten years of service. These contributions are projected at $23 million in the current year. These contributions, by staying in the OPEB trust and not being used for current costs, will decrease the plan’s actuarial liabilities and ARC. Strategies for Consideration for Addressing Connecticut’s Post Employment Benefit Liabilities and Costs In light of the State’s serious budgetary challenges over the next several years, and the pressure the growing costs of the State’s retirement systems place on other budgetary needs, the Commission believes a number of approaches need to be considered to reduce the unfunded pension liabilities of the State. Consideration should be given to new funding strategies, financing alternatives, and plan design and benefit modifications. The issues and factors outlined in this report, among others, will need to be weighed when considering the strategies and approaches to be implemented in seeking to reduce these liabilities.
It is important to note that there are Commission members who did not agree with some of the strategies presented below in regard to the State pension and OPEB plans. Also, the Commission did not seek to prioritize these strategies. The main goal of this report has been to provide information and potential approaches to addressing these liabilities to policy-makers and stakeholders.

The State needs to develop a sound funding strategy for its retirement plans and have the fiscal discipline to carry it out. Timely analysis and multi-year actuarial projections are critical when policy makers are reviewing funding practices or making decisions impacting the plans. Policy makers need to question how a declining proportion of working-age citizens can fund Connecticut’s unfunded liabilities for an increasing proportion of retirees.

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Summary of Strategies for Consideration for SERS and OPEB
Short Term Plan PreFund OPEB

Pay the ARC, and Eliminate Any Adjustments to Such. Increased Member Contributions. The State and SEBAC should consider additional employee contributions for reinvestment in the plans (with a 1 percent increase totaling about $32 million), while the State should consider enacting a provision that would dedicate, for example, a portion of future surpluses for the plans. Increasing the Retirement Age or Incentives to Retire Later. The State and SEBAC should consider raising the retirement age for those in Tiers II and IIA and increasing reductions related to early retirements, with any savings to be reinvested into the plans. For SERS, the projected savings totaled $135 million related to these changes in the first year, savings would increase going forward.
Other Plan Design Strategies. The State and SEBAC should consider plan modifications to SERS and OPEB, with any savings to be reinvested in the plans. In terms of OPEB, the changes for consideration include increased premium sharing and additional eligibility changes for employees moving directly to retirement from state service.
Service Delivery Changes. It is also critical to continue slowing health care inflation through plan and service delivery changes, including through the implementation of medical homes and other initiatives. A one percent reduction in the annual health inflation below the actuary’s assumed level would lower the calculated actuarial liability from $26.6 billion to $22.1 billion.

Long Term Plan ARC and Funding Strategies. The State should commit to a funding strategy targeting funding ratio benchmarks (e.g. 55 percent by 2018 for SERS), and consider establishing a “floor” below which ARC will not go below. Actuarial Analysis and Projections. The biennial actuarial valuations should reflect projections for liabilities and ARC amounts for all remaining years of the amortization schedule (not just two years). Future Changes. No action, such as a retirement incentive program or plan changes, should be enacted without a full actuarial analysis.
Considerable discussion was dedicated to the pros and cons of closing the defined benefit plan and replacing with a defined contribution arrangement for new employees; however, no consensus was reached as to whether this change would be beneficial to the State overall. Those on the Commission who opposed a defined contribution plan for new employees believe that such a plan would be more costly to the state and would not address the current unfunded liability problem, while providing lower and less secure retirement benefits to its employees. Those on the Commission who believed that a defined contribution plan should be considered expressed significant concern that the problems and

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issues associated with the defined benefit plan could be perpetuated going forward at a growing cost to the State, especially if the recommendations in this report are ignored. The challenge for the State will be to balance the need to increase the funding ratio of its pension and OPEB plans with the need to manage its overall budgetary needs. These increasing costs could lead to crowding out additional investments in education, infrastructure, health care, and in other critical areas.
It is the Commission’s hope that this report will provide useful information to the Governor, other elected officials, and the stakeholders in adding to the understanding of the State’s liabilities and costs related to its retirement system and in assessing the options available to address these issues.

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Introduction
Through Executive Order Number 38, dated February 3, 2010, Governor M. Jodi Rell established the State Post-Employment Benefits Commission. In establishing the Commission, Governor Rell indicated that pension and other post-employment benefits (OPEB), including retiree health insurance, play an important role in attracting and maintaining a work force capable of protecting the health and safety of the State and its residents. At the same time, Governor Rell recognized the growing budgetary challenges and impact on the State’s finances, including its credit rating, associated with the unfunded liabilities and future costs related to these benefit plans. The Governor created the Commission to assist her, other elected officials and stakeholders in developing and assessing short and long-term strategies for addressing these post-employment liabilities. Therefore, the Governor charged the Commission with delivering a report that:

Identifies the amount and extent of unfunded liabilities for pensions and other postemployment benefits; Compares and evaluates the advantages and disadvantages of various approaches for addressing unfunded pension liabilities and post-employment benefits; and Proposes a short and long-term plan or plans for addressing unfunded pension liabilities and post-employment benefits. The Governor originally requested delivery of the report by July 1, 2010, but additional time was provided given the challenges encountered in receiving necessary actuarial information reflecting, among other matters, the impact of the 2009 SEBAC changes. Most importantly, additional time was needed to thoroughly explore and discuss all of the issues and options associated with the State’s pension and OPEB liabilities.

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Commission Members The members of the Commission, appointed in accordance with Executive Order Number 38, are: Member Representing/Field

Michael J, Cicchetti, Chairman and Deputy Secretary of the Office State of Connecticut Office of of Policy and Management Policy & Management Thomas C. Woodruff, Ph.D., Director Healthcare Policy & Benefit Services, Office of the Comptroller Christine Shaw J.D., M.B.A., Director of Government Relations, Office of the Treasurer Sal Luciano, Executive Director, Council 4, American Federation of State, County and Municipal Employees Julie E. McNeal, CPA, Technical Activities Director, Connecticut Society of Certified Public Accountants Gregory M. Stump, FSA, EA, FCA, MAAA, Vice President, EFIActuaries J. Paul Mansour, Head of Municipal Research, Conning Other Participants Attorney Jamie Young, Governor’s Legal Office Judge Harry Calmar Office of the Governor State of Connecticut, Judicial Branch State of Connecticut, Office of the Comptroller State of Connecticut, Office of the State Treasurer State Employees Bargaining Agent Coalition Certified Public Accountants Public Pension Actuary Business Community

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Commission’s Approach
The Commission’s approach included reviewing numerous research reports and articles written about pension and OPEB issues. The Commission also reviewed significant amounts of information related specifically to Connecticut’s plans, including past and most recent actuarial valuations, pension and retiree health plan provisions, investment reports related to plan assets, as well as original and subsequent modifications to the collective bargaining agreement between State and the State Employee Bargaining Agent Coalition (SEBAC) that establish, in part, retiree benefit plans. The Commission also received information and presentations regarding how actuarial liabilities related to pensions and OPEB plans are measured and how the annual Actuarial Required Contribution (ARC) is calculated. Many of the documents reviewed by the Commission are available on its website. http://www.ct.gov/opm/cwp/view.asp?a=2998&q=457846&opmNav_GID=1791 The Commission developed a list of potential solutions or approaches in terms of funding and plan design and benefits based on reports pertaining to actions taken by other governments or organizations or through the members own professional experiences. The Commission focused on the State Employee Retirement System (SERS) plan. The Commission did not spend as much time reviewing the Teachers Retirement System (TRS) because this plan recently received significant attention related to a 2008 issuance of Pension Obligation Bonds (POBs). As part of the POB issuance, some of the requirements related to funding the ARC and plan benefits were built into the bond indenture or State Statutes. Nonetheless, a number of the recommendations in this report may apply to the TRS plan as well as the Judicial Retirement System (JRS) administered by the State.
The Commission sought to create a baseline for the current plans and funding approaches against which potential changes could be compared. The Commission’s approach was to obtain actuarial estimates that would provide projections of these liabilities and the potential impact of various approaches to addressing these obligations. Additional actuarial work and analysis may be needed as part of pursuing any of the changes recommended. As required by the Governor’s executive order, this report contains a discussion of the advantages and disadvantages of approaches considered.

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Background
Legal and Collective Bargaining Framework re State Employee Retirement Systems
The Commission reviewed the legal framework in which OPEB and pension benefits are provided to State employees and retirees. These retirement plans are provided largely in accordance with the collective bargaining agreement negotiated between the State and the State Employee Bargaining Agent Coalition (SEBAC). SEBAC is comprised of thirteen unions, and was recognized in 1986 by Public Act 86-411 to negotiate with the State on health benefits and retirement issues. The agreement also established the joint labor-management Health Care Cost Containment Committee. In 1997, the State and SEBAC negotiated a long-term health and retirement benefit agreement, which is effective through 2017. This agreement was most recently modified by the parties in 2009.

The Commission recognized that the ability to modify the benefits received by current retirees is limited, although there is current legal action in this regard in one or more states. In terms of active employees, most proposed benefit plan changes would have to be negotiated between the State and the coalition of bargaining units. As will be described, there have been some modifications to the 1997 agreement. The Commission also discussed the State’s ability to make benefit changes related to a group of former employees, known as terminated vested employees. Terminated vested employees have left state services but are eligible to begin receiving pension and/or retiree health insurance at some future date.

2009 State and SEBAC Agreement In addition to a Retirement Incentive Program (RIP), the 2009 SEBAC agreement contained a number of other modifications. Including: Increases in co-pays for prescription drugs and mandatory generic substitution except in cases of medical necessity certified by a member’s physician; An increase in active employee premium shares of $350 per year with a prorated amount to be reflected in future premium share percentages; Reductions in preventive care co-pays; The application of the “Rule of 75” (combination of age and service must equal 75) for eligibility for retiree health insurance for those with less than ten years of service as of July 1, 2009; and A 3 percent of salary contribution up through ten years of state employment for those with fewer than five years of service as of July 1, 2010. Contributions prior to July 1, 2013, according to the agreement, are available to reduce budgeted General Fund payments for retiree health care.
The 2009 SEBAC agreement also allowed the State to defer a contribution of $14.5 million that was budgeted for OPEB in fiscal year 2008-09, as well as to reduce contributions to SERS by $50 million in fiscal year 2008-09, and by $64.5 million in fiscal year 2009-10, below the ARCs calculated for those two years. The agreement also contained a trigger permitting the State to reduce its contribution to

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SERS by $100 million below the ARCs calculated for fiscal years 2009-10, and 2010-11, if revenues fell below a certain level. The total reductions included in State budgets related to SERS contributions were $314 million for the three-year period. Descriptions and Definitions of Actuarial Liabilities and Calculations Some of the terms used in this report are specific to actuarial calculations, and should be understood to appreciate the issues discussed herein. What is an actuarial liability and how is it measured? Employee benefits plans are generally defined in terms of three things: Who is entitled to receive benefits? Under what circumstances will they receive the benefits? What amount or level of benefits are they entitled to?
In the context of a pension or retiree healthcare plan, an actuarial liability is a dollar value that represents the present value of an expected benefit payment or stream of payments. The actuary takes into account a variety of actuarial assumptions, including life expectancy, expected retirement age, and projected future salaries and cost-of-living adjustments if appropriate. The most crucial assumption is the expected future return on plan assets. For most large pension funds, this assumption is around 8.0 percent annually. Based on anticipated future events, the assumptions are inevitably incorrect on a year-to year basis, creating actuarial gains and losses. A reliable set of assumptions; however, will reasonably represent the true experience of a plan over the long-term.

When plans are funded using actuarial principles, monies are contributed annually to an account as benefits are earned. The annual contribution is designed to cover benefits expected to be earned during the year, and past actuarial gains or losses. Generally, the desired outcome is a relatively predictable steady stream of contributions, typically measured as a percentage of payroll for covered members.
The funding ratio that is referred to most often in actuarial reports represents the ratio of two numbers: the value of benefits earned compared to the value of assets used to support those benefits. Ideally, this ratio would be consistently equal to or near 100 percent; however, the reality of economic cycles causes a great deal of volatility in such. Nonetheless, on average, over three-quarters of all statewide pension systems maintained a funding ratio between 75 percent and 125 percent, as reported in the annual surveys conducted by the National Association of Retirement Administrators (NASRA) from 2003 through 2008. Ratios for many of these systems have likely fallen below this range by 2010. The funding ratio in Connecticut is now well below this range, for reasons discussed within this report. Improved funding can come about through a variety of strategies, but it is important to keep in

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mind that pension funding and any improvements thereof, are long-term in nature and should be treated as such. KEY DEFINITIONS Actuarial Accrued Liability (AAL): The AAL represents a funding target equal to the present value of fully projected benefits earned or accrued as of the date of the actuarial valuation. The amount of the AAL is a result of a number of factors, including the level of benefits offered, eligibility requirements for benefits, the assumed rate of return on plan assets, and other actuarial assumptions (retirement age, longevity, etc). Unfunded Actuarial Accrued Liability (UAAL): The UAAL is the excess of the AAL over the actuarial value of plan assets. In other words, the UAAL is the present value of benefits earned to date that are not covered by current plan assets. A large UAAL is generally associated with plans that do not consistently receive ARC contributions.
Actuarially Required Contribution (ARC): The ARC is the annual employer contribution calculated by the actuary for a plan that is the sum of: (1) the employer “normal cost” of retirement benefits earned by active employees in the current year; and (2) the amount needed to amortize the existing unfunded liabilities over a period, not more than thirty years. Employee contributions are typically used to partially offset the employer’s normal cost. The goal of the ARC is to help account for costs as they accrue and to reduce unfunded liabilities (or surpluses) over time.

Normal Cost: The Normal Cost, also known as the annual benefit cost, generally represents the portion of the cost of projected benefits allocated to the current plan year. The employer normal cost equals the total normal cost of the plan reduced by employee contributions.

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State Administered Pension Plans
Overview of State Administered Pension Plans State Employee Retirement System (SERS)
SERS is a single-employer defined-benefit pension plan covering most of the State’s full-time employees. The plan also covers members of the General Assembly, constitutional officers and the Governor. According to the most recent actuarial valuation as of June 30, 2008, there were 38,093 retirees and beneficiaries receiving benefits, 1,592 terminated plan members entitled to, but not yet receiving benefits, and 53,196 active employee plan members. Subsequent to June 30, 2008, these numbers have changed through the normal course of business and, more significantly, the 2009 retirement incentive program agreed to by the State and SEBAC through which approximately 3,700 active SERS members retired. SERS is administered by the State Employees Retirement Commission and the State Comptroller’s Office.

SERS consists of Tier I (Generally for those hired prior to July 1, 1984), Tier II (Generally for those hired on or after July 1, 1984 and prior to July 1, 1997), and Tier IIA (for those hired on or after July 1, 1997). Historically, Connecticut has created new tiers, as opposed to modifying existing plans, in reaction to concerns relative to the plan’s unfunded liabilities. As discussed previously, the 1997 changes were part of a twenty year agreement, through 2017, regarding active employee health coverage and retiree healthcare benefits. Provided below in Schedule 1 is a summary of plan provisions, with a more detailed description of these provisions provided in Appendix 2 of this report.

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Schedule 1
SUMMARY OF KEY SERS PLAN PROVISIONS Final Average Earnings (all tiers): Average of three highest paid years (including overtime for some units), with no one year being greater than 130% of average of two prior years. Normal Retirement Eligibility: Tier I and II, IIA-Hazardous Duty: 20 years of service Tier I-Others: Age 55 with 25 years of service, age 60 with 10 years, or age 70 with 5 years Tier II and IIA: Age 62 with 10 years of service, age 60 with 25 years of service, age 70 with 5 years, or age 62 and 5 years for terminations on or after July 1, 1997 Normal Retirement Benefit: Tier I-Hazardous Duty: 50% of Final Average Earnings, plus 2% for each year over 20 years Tier II-Hazardous Duty: 2.5% of Final Average Earnings times up to 20 years, plus 2% for each year over 20 years Tier I-Others: Generally, 2% of Final Average Earnings times years of service. Tier II-Others: Generally, 1 1/3% of Final Average Earnings for each year of service, plus ½% of earnings in excess of breakpoint* (*$10,700 increased by 6% each year since 1982 but not greater than Social Security Compensation) Early Retirement: Tier I-Hazardous Duty: None Tier I-Others: Age 55 with 10 years of service; benefit is normal retirement reduced for retirement prior to age 60 with 25 years of service Tier II and IIA: Age 55 with 10 years of service, benefit reduced ¼% per month prior to normal retirement. Deferred Retirement: Tier I: May be deferred Tier II and IIA: May be deferred; Benefit is based on salary and service to actual retirement. Vesting: Tier I: 10 years of service Tier II & IIA: Effective July 1, 1997, 5 years of actual state service, 10 years of vesting service, or age 70 with 5 years of service. Member Contributions: Tier I-Hazardous Duty: 4% of earnings, plus 5% of earnings above Social Security Taxable Wages Tier I: 2% of earnings, plus 5% of earnings above Social Security Taxable Wages (Plan B); 5% of earnings (Plan C) Tier II: None Tier II-Hazardous Duty: 4% of earnings; Tier IIA-5% of earnings Tier IIA-All Others: 2% of earnings Cost of Living: For employees retiring after June 30, 1999, adjustment not less than 2.5% and no greater than 6%, calculations based on percentage of CPI

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Teachers Retirement System (TRS)
The Teachers’ Retirement System, administered by the Teachers Retirement Board, is a singleemployer defined-benefit pension plan covering any teacher, principal, superintendent or supervisor engaged in service to public schools in Connecticut. The plan provides retirement, disability and death benefits and annual cost-of-living adjustments to plan members and their beneficiaries. As of June 30, 2008, there were 28,787 retirees and beneficiaries receiving benefits, 1,394 terminated plan members entitled to, but not yet receiving benefits, and 81,919 active plan members.

For many years the State’s actual contributions to the TRS fell short of the calculated ARC, with fiscal year 2005-06 being the first year in which the actual contribution met the calculated ARC. Going forward, the bond indenture related to the TRS pension obligation bonds issuance requires that the state contribute the calculated ARC. There are provisions that would lift this requirement temporarily, if certain criteria related to severe budgetary problems are met. The current budgetary difficulties have not yet reached the thresholds established. As with SERS, the ARC for the TRS plan is calculated using the level percent-of-payroll method, meaning that the ARC, even if all actuarial assumptions were to be realized, will continue to increase each year.
In the most recent actuarial valuation for the TRS plan for the period ending June 30, 2008, the total liability for the plan is $21.8 billion with plan assets of $15.3 billion, resulting in a funding ratio of 70.05%. This is up from a funding ratio of 62.99% in 2006, largely resulting from issuance of $2.0 billion in POBs in 2008. As is projected for SERS, the 2008 funding ratio likely will drop in the 2010 valuation as the 2008 market losses are gradually recognized. Funding ratios are also affected by, among other factors, differences between the actual retirement ages, mortality, and population demographics experienced and the actuarial assumptions used in conducting valuations.

Judicial Retirement System (JRS)
The Judicial Retirement System is a single-employer defined-benefit pension plan covering any appointed judge or compensation commissioner in the state. The plan provides retirement, disability and death benefits and annual cost-of-living adjustments to plan members and their beneficiaries. As of June 30, 2008, there were 225 retirees and beneficiaries receiving benefits, 1 terminated plan member entitled to, but not yet receiving benefits, and 220 active plan members.

Alternate Retirement Program The State also sponsors the Alternate Retirement Program (ARP), a defined-contribution plan available to unclassified employees at any units of the Connecticut State System of Higher Education. Plan members are required to contribute 5 percent of their annual salaries, with the State contributing 8 percent of covered salary. During fiscal year 2009, plan members and the State contributed $35.3 million and $21.7 million, respectively.

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Funding History and Future Projections for SERS June 30, 2008 SERS Actuarial Valuation; Projection for June 30, 2010 The most recent actuarial valuation completed for the SERS plan was as of June 30, 2008, which indicated that the plan’s Actuarial Accrued Liability (AAL) was $19.243 billion, with assets valued at $9.990 billion, for a funding ratio of 51.92 percent. This funding ratio is among the lowest in the nation, for statewide plans. Actuarial Accrued Liability among Tiers for SERS
According to the actuarial valuation as of June 30, 2008, $14.3 billion of the $19.2 billion total liability in SERS is attributable to current retirees (a large majority of which are Tier I) and Tier I actives, with the balance associated with active members of Tiers II and IIA. While this is the total liability, the proportion of the unfunded liability for each tier probably bares a similar relationship to the proportion of the total liability. One implication of tiered liabilities is; choices are now limited to reduce the liability for Tier I plan members. Another consideration is that the projections produced by Cavanaugh Macdonald Consulting LLC (“Cavanaugh Macdonald”) for the period ending June 30, 2010 and beyond, reflect a significant increase in the unfunded liability for SERS, which will impact all three tiers.

Group Inactives Tier I Actives Tier II Actives Tier IIA Actives Total

Schedule 2-SERS Liabilities by Groups/Tiers (as of 6/30/08) Actuarial Accrued Liability Normal Costs % of Payroll $11.4 billion $2.9 billion Hazardous Duty: 13.08 %; B: 13.90 %; C: 10.90 % $4.0 billion Hazardous Duty: 14.80 %; all others: 9.75 % $.9 billion Hazardous Duty: 6.95 %; all others: 4.70 % $19.2 billion 9.44%

A recent projection done for the Commission by the actuarial firm Cavanaugh Macdonald indicates, based on the loss in value of plan assets, along with lower contributions and the RIP, that the funding ratio will drop to 45.8 percent for the period ending June 30, 2010. A significant ongoing budgetary challenge is the steady increase in the ARC for the years beginning 2011-12 and beyond. The $1.029 billion ARC projected by Cavanaugh Macdonald for fiscal year 2011-2012 is $185 million higher than the $844 million contribution being made by the state in the current year, fiscal year 2010-11, and will continue to increase each year thereafter, until the unfunded accrued liability is fully amortized.

Causes of Growth in SERS Unfunded Liability and Lack of Funding Progress
The SERS plan has historically been underfunded based in part because until the 1980’s, it was funded on a pay-as-you-go basis. As can be seen in Chart 1, the funding ratio for this plan is just slightly above the level that existed back in 1992, despite a decision to begin funding the ARC. The lack of funding progress is due to the several contributing factors as described below.

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Chart 1

SERS Funding Ratios and % of ARC Contributed
110.00% 100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00%

Funding Ratio

% ARC Contributed

Sources: June 30, 2008 SERS Actuarial Valuation; Projected FY 12 by Cavanaugh Macdonald, new actuaries for SERS Note: The Annual Required Contributions above reflect the deductions made based on the interpretation of the requirements related to SEBAC IV and V. The ARC before these adjustments was generally 10% to 15% higher than the ARC shown above.

The factors contributing to the magnitude of the SERS actuarial accrued liability include:
(1) Methods of Calculating the ARC. The Level Percent-of-Payroll method used to calculate the amortization component of a plan’s ARC is similar to a home mortgage where mostly interest is paid in the early years. The dollar amount of the ARC rises over time by including an automatic cost escalator (typically 2% to 5% per year). This makes it more difficult to make progress improving the plan’s funding ratio until half way through the amortization period.

Under the Level Dollar method, the ARC payment starts higher but does not increase as precipitously over the years as under the percent-of-payroll method. Higher funding in the earlier years provides consistent progress in improving the plan’s funding ratio. Charts 2 and 3 below demonstrate the differences in these two methods with projections done in August 2010 by Cavanaugh Macdonald. While both methods of calculating the ARC are acceptable approaches, the actuary’s application of the level percent-of-payroll approach helps to explain, in part, why the plan’s funding ratio will not show improvement in the near term.

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Chart 2

ARC Amounts: Level % of Payroll vs. Level Dollar (000's)
(Note: Since the Normal Cost amount is the same under both approaches, the full difference in the ARC amounts is the amortization method)

$3,900,000 $3,600,000 $3,300,000 $3,000,000 $2,700,000 $2,400,000 $2,100,000 $1,800,000 $1,500,000 $1,200,000 $900,000 FY12 FY14 FY16 FY18 FY20 FY22 FY24 FY26 FY28 FY30 FY32 FY33 FY34 Level Percent Payroll ARC Level Dollar ARC

Chart 3

Funding Ratios Level Percent of Payroll and Level Dollar
100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% FY12 FY14 FY16 FY18 FY20 FY22 FY24 FY26 FY28 FY30 FY32 FY33 FY34
Level Percent Payroll % Level Dollar %

NOTE: As seen in Charts 2 and 3, contribution amounts are much larger in the early years under a level-dollar amortization; however, the funding ratio improves more quickly. A similar funding ratio improvement can be achieved using a level percent-of-payroll amortization with a shorter amortization period.

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(2) Adjustments to Amortization Schedule; Contributing less than the Full ARC. Another critical issue for the SERS plan is the effect that the SEBAC agreements IV and V, negotiated by the State and the coalition in 1995 and 1997, respectively, have had on the ARC calculation. Each year the ARC is calculated in accordance with actuarial standards, and then reduced under interpretations of SEBAC IV and V. These reductions were $43.7 million and $61.8 million, respectively, for a total reduction in the ARC of $105.5 million in the ARC calculation for fiscal year 2011. The calculations for fiscal years 2002-2011 are provided below in Schedule 3, which reflects adjustments made related to SEBAC IV and V in the 2009 agreement. It is unclear if the provisions of SEBAC IV and SEBAC V have been interpreted correctly in terms of applying these reductions to the ARC. The total reductions for these 10 years is $820 million, with the full amount through the agreement period likely being $1.0 billion or more. According to Cavanaugh Macdonald, the impact of the SEBAC IV and V interpretations has been to exacerbate the back-loading of the amortization schedule already inherent in the level percent-of-payroll method, which leads to further growth each year in the ARC and delays improving the plan’s funding ratio.

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Schedule 3-ARC Calculation for Fiscal Years 2002-2011 (from Actuarial Valuations)
ARC Calculation (Amortization Period) FY2002(31yrs) FY 2003 (30) FY 2004 (29) FY 2005 (28) FY 2006 (27) FY 2007 (26) FY 2008 (25) FY 2009 (24) FY 2010 (23) FY2011 (22) 10 Year Total Amortization PaymentUnfunded Liability $224,822,810 227,445,258 290,512,660 316,448,241 421,328,884 453,571,533 490,600,066 523,100,250 663,525,189 708,627,332 Actual Contribution as a Percent of ARC before Adjustments 87% 85% 84% 87% 89% 89% 89% 83% 73% 80% 84%

Normal Cost $254,856,678 265,853,449 271,856,543 280,857,803 279,753,428 292,275,360 312,360,768 320,915,187 335,323,144 340,926,657

Total ARC before Adjustments $479,679,488 493,298,707 562,369,203 597,306,044 701,082,312 745,846,893 802,960,834 844,015,437 998,848,333 1,049,553,989 $7,274,961,240

SEBAC IV Asset Adjustment ($26,606,725) (27,937,061) (29,333,914) (30,800,610) (32,340,640) (33,957,672) (35,655,556) (37,438,334) (42,040,683) (43,722,310) ($339,833,505)

SEBAC V Asset Adjustment ($37,580,164) (39,459,172) (41,432,130) (43,503,737) (45,678,924) (47,962,870) (50,361,014) (52,879,064) (59,379,565) (61,754,747)

Reported ARC $415,492,599 425,902,474 491,603,159 523,001,697 623,062,748 663,926,351 716,944,264 753,698,039 897,428,085 944,076,932

Additional Adjustment per SEBAC 2009 N/A N/A N/A N/A N/A N/A N/A ($50,000,000) ($164,500,000) ($100,000,000)*

Actual Contribution $415,492,599 421,451,731 470,332,944 518,768,821 623,062,732 663,930,735 711,555,274 $703,698,039 $732,928,085 $844,076,932

($479,991,387) $6,455,136,348

($314,500,000) $6,105,297,892

*The FY2011 state budget presumes that the lower state revenue amounts will trigger a provision that allows for a $100 million reduction in the contribution.

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(3) Investment Return Experience. When the actual rates of return are less than the actuarial assumption, the result will likely be a decrease in the funding ratio and a costlier ARC. For SERS, the late 1990’s reflected strong investment returns while the results from 2001 on, have generally been below the assumed level.
Like all but a handful of states, Connecticut smoothes its investment gains and losses over a set number of years, recording only a portion of the impact each year. This means that under current smoothing techniques the funding levels will likely continue to drop for the next four or five years, as the major losses experienced in 2008 are gradually incorporated. In a year when the pension fund loses value, its position is doubly compromised. It loses both a portion of the funds’ assets and the assumed earnings. The Pew Center report notes that the “critical question for states is whether the investment returns of the past two years are anomalous or whether they signal a fundamental change in how the markets will be operating.”

In February 2010 the Pew Center on the States Report reported that seventeen states use an investment return assumption of less than 8 percent, while twenty-two others use an 8.0 percent assumption. According to the report, Connecticut is one of eleven states utilizing an investment return assumption greater than 8.0 percent. However, it is important to assess the reasonableness of the return assumption not by itself but in its relationship to the assumed rate of inflation. When returns are lower than expected (an actuarial loss), this is often partially offset by inflation being lower than expected (an actuarial gain). Schedule 4- SERS-Historical Rates of Return
Assumed Rate of Return 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.25% Actual Market Value 11.70% 4.50% 13.10% 14.40% 19.00% 17.20% 10.30% 13.10% -3.71% -6.61% 1.91% 15.20% 10.45% 11.01% 17.11% -4.80% -18.58% 6.86% Actual Actuarial Value 8.80% 7.40% 8.40% 10.70% 12.90% 14.30% 14.60% 15.00% 9.02% 5.84% 5.08% 6.74% 7.37% 8.03% 9.80% 6.76% 2.63% 8.97%

Fiscal Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Compound Return 1993-2009

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(4) Retirement Incentive Programs (RIP). Actuaries make pension liability computations based upon assumptions and projections including when employees will retire. There are two kinds of retirement incentive programs; those that incent employees to retire earlier than they might otherwise have; and those that incent employees to delay retirement. Historically, Connecticut RIPs have incentivized employees to retire early by offering additional benefits. These incentive plans add to the state’s liability. Conversely, if Connecticut incentivized employees to delay retirement with an actuarially sound plan, the liability would decrease. (5) Actuarial Gains and Losses. There are numerous actuarial assumptions that are made when calculating liabilities and ARCs, including turnover, salary increases and a number of others. To the extent that some of these assumptions are not realized, the actuarial amounts will be different than projected. An overview of the major actuarial methods and assumptions used for State-administered pension plans are included in Schedule 5. Schedule 5- Actuarial Methods and Assumptions from Comptroller’s June 30, 2009 Comprehensive Annual Financial Report
The following is information as of the most recent actuarial valuation: SERF Valuation Date Actuarial Cost Method 6/30/2008 Projected unit credit cost method Amortization Method Remaining Amortization Period Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Includes inflation at Cost-of-Living Adjustments 8.25% 4.0%-20.0% 4.0% 2.7%-3.6% 8.5% 4.0%-7.5% 4.0% 2.0%-3.0% 8.25% 5.25% 5.25% 2.75%-5.25% Level percent of payroll 24 Years 20% of declining balance method* TRF 6/30/2008 Entry age actuarial cost method using level percent of payroll funding Level percent of payroll 29.2 years 4-year smoothed market
JRS

6/30/08 Projected unit credit cost method Level percent of payroll 23 Years 5-year smoothed market

* This method has since been changed to a 5-year smoothed market value.

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Pensions: Comparisons to Other States, Municipalities and Private Sector Connecticut’s Pension Funding Ratios
In the Pew Center on the States report on state retirement systems issued in February 2010, the State of Connecticut’s combined 2008 funding ratio in regard to its three pension plans of 61.6 percent was the fifth lowest among the fifty states. Similarly, the National Association of Retirement Systems Administrators 2008 survey found Connecticut ranked 49 out of 51 states and the District of Columbia in terms of the combined ratio of the SERS and TRS funding ratio (58.5 percent). Individually, the SERS (53.3 percent as of June 30, 2005) and TRS (63.0 percent as of June 30, 2006) plans were 115 and 121 , respectively, out of 125 statewide plans listed in the survey. The total average funding ratio for all the plans surveyed was 85.3 percent.
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Connecticut’s Pension Plan Provisions
Comparing pension benefit levels between states is complicated by the differences in the actuarial assumptions utilized (e.g., discount rates) and the timing of valuations. Data for stateadministered pension plans from the February 2010 Pew Report indicated that Connecticut’s total liability per capita for its three pension plans is 10 highest in the country. The data included the liabilities associated with Tier I, which has not had new participants since July 1, 1984.
The Federal Reserve Bank of Boston recently completed a report regarding state pension plans in the six New England States. The report did not include Tier I in Connecticut in its comparisons, since it has not been available to new employees since 1984. In comparing Connecticut’s Tier II/IIA plan provisions to plans in other states, the pension salaries at retirement are lower in Connecticut than the other states, with comparisons to Massachusetts and Maine being somewhat more difficult because their employees are not eligible for social security. The other New England states paying into the social security fund for employees have significantly higher employee contribution amounts than Connecticut. The other New England states range from 5.1 percent in Vermont to 8.75 percent in Rhode Island.
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Connecticut’s comparable employee contributions for non-hazardous duty employees in Tiers II and IIA are zero and 2 percent, respectively. The other New England states also generally have a steeper reduction in benefit amounts for early retirements.
Connecticut inflation based cost-of-living adjustments (COLAs) for Tiers II and IIA range from 2.5 percent to 6.0 percent, calculated as a percentage of CPI, with the actuarial assumption used being 2.7 percent. COLA provisions vary across the country and between municipalities in Connecticut. Among New England states, Massachusetts indexes only the first $12,000 per year, up to a maximum of 3 percent. The maximums in Maine and Rhode Island are 4 percent and 3 percent respectively, while

Vermont’s range is 1 to 5 percent. New Hampshire has no automatic COLA, but the legislature makes regular ad-hoc adjustments.

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In terms of the percentage of final average salary earned per year of service, Tiers II and IIA, representing most members’ current benefit accruals in SERS, are lower than other New England states.

Another important benefit component is the calculation of final average salaries. Most state plans determine final average salaries over a 3 to 5 year period, with most of those, like Connecticut, being at 3 years. A shorter period results in a final salary that is closer to a person’s earnings near retirement, which benefits those with rapidly growing salaries.
A related issue addressed in Connecticut’s plans and in others involves “spiking” of final average salaries through increased use of overtime and by other means. Massachusetts’s special commission on its retirement systems indicated that 45 of the 108 largest state-administered plans currently have anti-spiking provisions in place. Some states simply have language that prohibits unusual payments just prior to retirement, but twenty-seven plans have percentage limits on the annual increases used in calculating final average salary. These anti-spiking provisions vary, with limits on annual salary growth of 5 to 20 percent, with a median of 10 percent. Connecticut’s SERS and TRS limits were annualized at 14 percent in the Massachusetts report. The level of base salaries and the types of additional compensation included in final average salaries (e.g., overtime, longevity) are other critical areas in which plans may differ.

Another issue discussed by the Commission was the ability for members to buy additional years of service in a plan, whether such service was in local government, the military or in other areas. Plans have differing provisions in this regard, however the amount charged for buying additional years should reflect the actuarial value of the added benefit. There has been some attention given to those who have retired under the SERS plan with pensions of at least $100,000. These pensions are often related to high salaried positions in our state university systems. Many of these individuals are likely in Tier I. The concerns about these high pensions include what impact they will have on the plan’s liabilities and costs and perhaps a sense that high-salaried employees should assume more responsibility for their retirement needs. There is a maximum annual benefit (currently $195,000, indexed for inflation and adjusted for age at retirement) based on the Internal Revenue Code. Cavanaugh Macdonald projected very minor changes in the ARC associated with placing caps of $150,000 and $125,000 on pensions in Tiers II and IIA, respectively. While the annual pension payments for retired members range from very low amounts to these higher amounts, the average pension payment was approximately $27,500 per year in the June 30, 2008 valuation. Connecticut Municipal Pension Plans 170 Connecticut municipalities, including both the Town and City of Groton, submitted audit information to the Office of Policy and Management (OPM). Some of the summary data from the June 30, 2008 audit reports related to pension plans is as follows: Only 7 municipalities reported not offering a pension plan to any of their employees, while 163 municipalities offer a pension plan to some or all of their employees.

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There were 208 defined-benefit plans, 61 defined-contribution plans, and 45 municipalities participating in the State’s Municipal Employee Retirement Fund (MERF) (20 municipalities offered only MERF). There were 24 municipalities with a defined-contribution plan only, while 113 had at least one self-administered defined-benefit Plan. For the 178 defined-benefit plans for which data was available, the aggregate total actuarial accrued liability was $8.2 billion with $6.8 billion in assets, for a funding ratio of 83.3 percent. Private Sector Pension Plans
According to the Employee Benefit Research Institute, a nonprofit research institute in Washington, D.C, in 2008, 79 percent of public sector employees had a defined-benefit plan. In comparison, 33 percent of private-sector employees were enrolled in a defined-benefit pension plan in the same period. Eighteen percent of state workers had a defined-contribution plan in 2008, compared with 55 percent of private sector workers enrolled in a defined-contribution plan.

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State Other Post Employment Benefit (OPEB) Plans
Overview of State Administered OPEB Plans
The State sponsors two defined-benefit OPEB plans: the State Employee OPEB Plan and the Retired Teacher Health Care Plan (RTHP). The State OPEB plan is administered by the State

Comptroller’s Office, while the RTHP is administered by the Teachers’ Retirement Board. While OPEB plans involve life insurance and other non-pension post-employment benefits, almost all of the liability in this area relates to retiree health insurance plans. State Employee OPEB Plan
The State Employee OPEB Plan is a single-employer defined-benefit OPEB plan that covers retired employees of the State who are receiving benefits from SERS or other state-sponsored retirement systems, except TRS and the Municipal Employee Retirement System. As of the 2006 OPEB valuation, there were 59,347 active members, 42,395 retired members and 27,266 spouses of retirees, for a total of 129,008 members. Of the 129,008 members, 11,887 were Non-SERS members. These numbers have, of course, changed since the last full valuation in 2006.
A Summary of Plan Provisions is outlined in Schedule 6. OPEB benefits (i.e., Life Insurance, Dental, and Medical) are available for those who retire with a normal, early or disability retirement under the applicable retirement system. Participants who are deemed terminated vested in the retirement system have been, to date, eligible for OPEB benefits when they begin collecting retirement benefits. The “Rule of 75” in the 2009 SEBAC agreement, described later in this report, makes changes in this category. The ability to leave state service after ten years for another job and at later date begin receiving full retiree health benefits is reportedly not found in many other state plans.

Schedule 6: Summary of OPEB Plan Provisions (not including life insurance) Pre-65 retirees have the choice of the State’s POE and POS medical plans (PPO plan was closed for future retirees as part of the 2009 SEBAC agreement). For those eligible for Medicare, Medicare is primary plan and the State plan is administered as a supplement to Medicare. For those who retired before July 1, 1997 or under the 1997 Early Retirement Incentive Program (ERIP), the premium share is zero percent, with participants only responsible for co-pays. For those who retired July 1, 1997 to June 30, 1999, the retiree pays 0 percent except those in the PPO plan who pay up to a maximum of approximately 3 percent. For those retired July 1, 1999 or later, ‘POE/out of area PPO’, the premium share is 0 percent, while Pre-65 ‘POS/PPO’ premium shares are a variable amount up to a maximum of about 3 percent for retiree and dependant coverage. Premium shares for Post-65 POS/PPO coverage is 0 percent for retiree coverage and a variable amount for dependant coverage up to a maximum of approximately 3 percent. Retirees pay 80% of dental premiums.

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Retired Teachers Health Plan (RTHP)
The RTHP is a is a single-employer defined-benefit OPEB plan that covers retired teachers and administrators of public schools in Connecticut who are receiving benefits from the Teachers’

Retirement System. The plan provides healthcare insurance benefits to eligible retirees and their spouses. The cost of providing plan benefits is designed to be financed on a pay-as-you-go basis as follows: active teachers pay for one-third of plan costs though a contribution of 1.25 percent of their annual salary, retired teachers pay for one-third of plan costs through monthly premiums, and the State pays for one-third of plan costs through an annual appropriation in the General Fund. As of June 30, 2008, the plan had 30,619 retirees and beneficiaries receiving benefits. In fiscal year 2009, the General Fund contribution was $22.433 million, although no contributions were made in fiscal years 2010 and likely in 2011 in response to the State’s budget situation. The RTHP was recently able to lower its costs associated with its prescription drug plan by purchasing prescription drugs through the state employee health plan. State OPEB Actuarial Accrued Liability and ARC Amounts
Statements 43 and 45 from the Governmental Accounting Standards Board (GASB) required governments to begin reflecting their OPEB liabilities in their financial statements similar to their pension liabilities. As will be discussed, the OPEB plan’s actuary uses a 4.50 percent discount rate related to the pay-as-you-go approach, even though no assets are accumulating. The State of Connecticut’s first valuation for its OPEB plan was completed for the period ending April 1, 2006. An update to the 2006 valuation was provided for the period ending April 30, 2008. Milliman, the actuary for the State OPEB plan, recently produced an interim report again using the 2008 data. The AAL, ARC and actual state payments from the valuation and updates are in Schedule 7.

Valuation Date/Discount Rate Period Ending April 1, 2006 4.50 % Discount Rate (Pay-as-you-go) $21.7 billion $1.6 billion 8.50 % Discount Rate (Pay Full ARC) $11.4 billion $.96 billion Period Ending April 1, 2008 (update) 4.50 % Discount Rate (Pay-as-you-go) $24.6 billion $1.66 billion 8.50 % Discount Rate (Pay Full ARC) $13.2 billion $1.01 billion Period Ending April 1, 2008(interim July 2010)** 4.50 % Discount Rate (Pay-as-you-go) $26.6 billion $1.9 billion 8.25 % Discount Rate (Pay Full ARC) $14.0 billion $1.2 billion *The Unfunded Accrued Liability is equal to the AAL because there are no plan assets.

Schedule 7: OPEB Valuation Summaries Actuarial Accrued State Actual Payment Liability (AAL)* ARC $.418 billion $.418 billion $.464 billion $.464 billion $.464 billion $.464 billion

** Does not reflect the 2009 SEBAC agreement, including the RIP, the Rule of 75 and the 3 percent contribution for newer employees for up through 10 years of service.

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Connecticut’s OPEB funding challenge is finding the additional dollars necessary to fund the ARC. On the other hand, continuing pay-as-you-go will subject the state to a significant and continuing escalation in these costs from a combination of health care inflation and a growing number of retirees. From fiscal year 1999-00 to 2008-09, these costs increased at an annual rate of 11.2 percent.

Chart 4

State Payments for Retiree Health Insurance (000's)
$600,000 $500,000 $400,000 $300,000 $200,000 $100,000 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Est FY10 FY11 Est

Breakdown of OPEB Actuarial Accrued Liability Schedules 8a and 8b, which were provided by the actuarial firm, Milliman, provide breakdowns of the actuarial liability and the related ARC for the state OPEB plan reflecting their recent interim update of the liabilities using the April 1, 2008 data. As indicated, these projections do not reflect the 2009 SEBAC agreement. The schedules break out the estimated actuarial accrued liabilities (AAL) and related ARCs for OPEB benefits to be provided to: Active employees in Tiers I, II, and IIA and in nonSERS plans; Terminated vested employees; and Current retirees (In-pay status). The AAL and related ARCs are further broken down for active and terminated vested employees Member (i.e. employee) Pre-65 and Member post-65 and Dependant Pre-65 and Dependant Post-65.
The information is provided for a 4.50 percent discount rate (Schedule 8a) and an 8.25 percent discount rate (pay full ARC, Schedule 8b). As can be seen in the schedules, $14.6 billion of the AAL with a 4.50 percent discount rate is related to active employees and $11.9 billion related to current retirees and terminated vested employees, for a total AAL of $26.5 billion. The projected AAL declines to $14.0 billion when a discount rate of 8.25 percent is utilized as an acknowledgement of fully funding the ARC.

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Schedule 8a: OPEB Liability and ARC Breakdown 4/1/08 Valuation Preliminary Results
Details of Accrued Liability and ARC ($000s)
Accrued Liability Member pre-65 Member post65 Dependant pre65 Dependant post-65 Retirees Totals ARC Member pre-65 Member post65 Dependant pre65 Dependant post-65 Retirees Totals 0 $137,605 0 $571,413 0 $530,997 0 $258,234 0 $1,498,249 0 $130,230 313,879 $313,879 313,879 $444,109 313,879 1,942,358 0 $2,419,383 Tier I Actives $23,073 53,474 16,921 44,137 0 $7,256,298 Tier II Actives $113,600 200,168 88,557 169,088 0 0 $2,949,150 $2,023,762 Tier IIA Actives $101,634 187,581 82,163 159,619 Non-SERS Active $35,099 95,486 32,805 94,844 Total Active $273,406 536,709 220,446 467,688 0 $14,648,593 0 $3,494,903 Terminated Vested $27,469 45,575 21,899 35,287 8,423,446 8,423,446 $8,423,446 $11,918,349 In-Pay Status $0 0 0 0 Total Inpay/Term $27,469 45,575 21,899 35,287 Total $300,875 582,284 242,345 502,975 8,423,446 $26,566,942 Tier I Actives $390,370 956,216 280,517 792,280 Tier II Actives $1,375,732 2,622,284 1,058,930 2,199,352 Tier IIA Actives $554,684 1,062,259 440,585 891,622 Non-SERS Active $260,729 766,942 233,160 762,931 Total Active $2,581,515 5,407,701 2,013,192 4,646,185

Discount Rate= 4.50% Pay-as-you-go
Terminated Vested $737,155 1,223,080 587,689 946,979 In- Pay Status $0 0 0 0 Total Inpay/Term $737,155 1,223,080 587,689 946,979 Total $3,318,670 6,630,781 2,600,881 5,593,434

Schedule 8b: OPEB Liability and ARC Breakdown 4/1/08 Valuation Preliminary Results
Details of Accrued Liability and ARC ($000s)
Accrued Liability Member pre-65 Member post-65 Dependant pre65 Dependant post65 Retirees Totals ARC Member pre-65 Member post-65 Dependant pre65 Dependant post65 Retirees Totals 0 $97,473 0 $325,558 0 $228,893 0 $128,302 0 $780,226 0 $99,175 323,522 $323,522 323,522 $422,697 323,522 $1,202,923 Tier I Actives $273,980 432,869 206,123 358,994 0 $1,271,966 Tier I Actives $21,723 32,401 16,524 26,825 Tier II Actives $833,293 1,026,984 654,218 855,324 0 $3,369,819 Tier II Actives $84,348 94,934 66,763 79,513 Tier IIA Actives $286,742 371,414 229,915 309,705 0 $1,197,776 Tier IIA Actives $55,832 69,327 45,394 58,340 Non-SERS Active $152,805 322,374 141,374 321,718 0 $938,271 Non-SERS Active $22,097 42,629 21,073 42,503 Total Active $184,000 239,291 149,754 207,181 Total Active $1,546,820 2,153,641 1,231,630 1,845,741 0 $6,777,832

Discount Rate= 8.25% Pay full ARC
Terminated Vested $491,446 458,634 391,880 358,331 0 $1,700,291 Terminated Vested $28,665 26,752 22,858 20,900 In- Pay Status $0 0 0 0 5,546,622 $5,546,622 In-Pay Status $0 0 0 0 Total Inpay/Term $491,446 458,634 391,880 358,331 5,546,622 $7,246,913 Total Inpay/Term $28,665 26,752 22,858 20,900 Total $2,038,266 2,612,275 1,623,510 2,204,072 5,546,622 $14,024,745 Total $212,665 266,043 172,612 228,081

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OPEB Liability by Group (from Schedule 8a) 4.50% Discount Rate
Tier I Active 9%

Retirees 32% Tier II Active 27% Terminated Vested 13% Non-SERS Active 8% Tier II-A Active 11%

Impact of State and Employee Contributions on Discount Rate and Total Liabilities The OPEB plan’s actuary uses a 4.50 percent discount rate to the pay-as-you-go approach, even though no assets are accumulating. This rate represents a long-term expected rate of return on short-term fixed income securities, which are typically found in the assets of the employer. A number of Commission members expressed concern as to whether this 4.50 percent discount rate underestimates the AAL; however, the members deferred to the actuary’s application of standard practices in making these assumptions.
Milliman also produced AAL and ARC projections using a blended discount rate reflecting the 4.50 percent discount rate referenced previously and varying levels of accumulating assets beyond the pay-as-you-go amount. These discount rates are weighted proportionally to the respective reliance

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expected to be placed on plan assets to pay OPEB benefits when due or on annual budgets to pay OPEB benefits when due. One scenario involved a 6.08% discount rate related to a partial pre-funding arrangement based upon a State contribution of $100 million and future State contributions of $50 million per year increasing by 5 percent per year after the first year. The resulting AAL and ARC amounts are included in Schedule 9.
Another projection was provided by Milliman related to an alternate pre-funding strategy in which an initial State contribution of $10 million and employee contributions of $17 million per year growing by 4 percent each year related to the 3 percent of payroll contribution up through 10 years of state employment for those with fewer than 5 years of service as of July 1, 2010 included in the 2009 SEBAC agreement. Recent estimates are that these contributions will be $23 million in the current year, up from the $17 million original estimate. Milliman noted that if these employee contributions were used to cover current year cost of benefits, as SEBAC 2009 allows up to 2013, there would be no change in the AAL since there would be no accumulation of assets. On the other hand, if there were to be a policy to place the contributions in the trust for a significant time period (20-30 years or more), there would be an impact on both the AAL and ARC.
Milliman calculated a discount rate of 5.02 percent related to allowing the employee contributions to remain in the trust, with related decreases in the AAL and ARC of $2.547 billion and $155 million, respectively, compared to the pay-as-you-go amounts (see Schedule 9). From a budgetary standpoint, the State would be paying for many years to come the full pay-as-you-go amount, which would continue to grow each year. The policy question is at what point plan assets would be used to pay for current expenses since the use of higher discount rates assumes that contributions above the pay-as-you-go amount would remain in the trust for a significant amount of time.

Schedule 9: OPEB AAL and ARC by Discount Rate (as of April 1, 2008) Discount Rate AAL ARC 4.50% (Pay-as-you-go) $26.567 billion $1.942 billion 5.02% $24.020 billion $1.787 billion 6.08% $19.814 billion $1.536 billion 8.25% (Pay full ARC) $14.025 billion $1.203 billion Health Care Costs and Trends Milliman also did some projections related to the impact on the AAL and ARC associated with changes in the health care inflation trends. The health care inflation trends utilized by Milliman in making their projections were 7.65 percent in the first five years, 5.9 percent for the next five years, and then gradually trending down to 4.70 percent by year 52. Some members questioned if this trend is too high based on the State’s experience, however, the Commission understands that there is a great deal of uncertainty with these assumptions.

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Milliman’s projections demonstrated that changes in the health care inflation assumption have a significant impact on the OPEB plan’s liabilities. Milliman projected that a 1 percent ongoing increase above the amount assumed would increase the total OPEB liability by $3.75 billion, while a 2 percent increase would increase the total by $8.55 billion (both using a 6.08 percent discount rate). On the other hand, a 1 percent decrease below the baseline trend would lead to a $2.96 billion projected reduction in liability, with the projected impact of 2 percent reduction below the trend being a decrease of $5.33 billion in the liability.
If health care cost trends can be brought down through improvements in the delivery of health care, such as the use of medical homes, plan changes and other measures, the impact on lowering the State’s annual costs and liabilities associated with its OPEB plan could be significant.

The State is now pursuing a medical home pilot with respect to the state employee plan to determine the impact of this change in service delivery method. The State is also seeking to take part in a multi-payer medical home demonstration project as part of the federal health care reform. The goal of these pilot programs is to determine if the savings from strengthening primary care will be equal to the additional payment levels for primary care. The savings anticipated under the medical home model include those associated with fewer emergency room visits, reducing major illnesses through working with patients to follow testing and other medical protocols and in other areas. One of the serious challenges raised with this model is whether it can work without major reforms to the current fee-for-service payment method. OPEB: Comparisons to Other States, Municipalities and Private Sector State OPEB Plans and Provisions
A November 2009 report done by the Center for State and Local Government Excellence found that Connecticut’s unfunded OPEB liability per capita was the third highest in the nation, behind only

New Jersey and Hawaii. Connecticut is fourth highest in terms of its total liability per capita. Most states, including Connecticut, have zero or a very low level of assets in dedicated OPEB funds, with only 7 or 8 states reporting any meaningful level of funding.
The Center for State and Local Government Excellence report states that the “substantial variation in the unfunded liabilities is a function of the size of the workforce, the generosity of the retiree health plan, the portion of the total cost of the health care program paid by the state, and the type of employees in included in the plan.” The inclusion or treatment of spouses and dependants is also a factor, as well as the provisions related to retirees who are eligible for Medicare. The extent to which states have certain services provided by county governments could impact these per capita comparisons as well. Unlike a number of other states, Connecticut does not have county governments. As an example of these differences, in a 2007 report, the Federal Reserve Bank of Boston indicated that among the New England states, benefit payments per eligible retiree in 2006, recorded on

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a pay-as-you-go basis, ranged from approximately $3,300 for Maine to $11,000 for Connecticut, according to the states’ Comprehensive Annual Financial Reports. There are also a number of states across the country whose liabilities are limited to or include only the “implicit subsidy” involved with allowing retirees (who generally have higher medical costs than younger active workers) to participate in the state’s plan with the retiree paying the full premium. Premium sharing by Connecticut retirees is currently minimal, ranging from zero to 3 percent. Commonly state employees go directly into retirement in order to receive state employee retiree health insurance, rather than leaving State employment with the idea of collecting benefits years later.
A number of states prorate the amount of premium share paid by retirees based on the number of years of service. The report of the Massachusetts special commission on its retirement systems issued in 2009 listed thirteen states whose retiree health plans include a percent reduction for each year of service below a certain number (e.g., 20 years) in the amount of premium to be paid by the state, while 9 states have a dollar amount reduction for each year of service below a certain number. These reductions make retiree health plans analogous to pension plans in that the amount of the benefit received is correlated to the number of years of service provided. Other states have rules similar to

Connecticut’s Rule of 75 related to retiree health care eligibility. Municipalities and the Private Sector Fiscal year 2008 was the first year for many municipalities to include OPEB status information, based on an actuarial valuation, in their financial reports. Aggregating the data for the 25 Connecticut municipalities having valuations, the total actuarial accrued liability was $5.0 billion, with assets of $3,200,000, for a funding ratio of less than 0.1 percent.
While not reporting funding ratios related to the private sector regarding OPEB-type benefits, the Kaiser Family Foundation’s Employer Health Benefits Survey for 2009 did contain information about the percentage of firms that offer active health benefits that also offer retiree health benefits. Of all large firms of 200 or more workers that offered active employee health insurance, 29 percent of these employers offer retiree health benefits. State/local government was the highest at 81 percent. Of the large firms that do provide retiree health insurance, 92 percent provide retiree health benefits to early retirees, with 68 percent offering retiree health for Medicare-Age Retirees. The percentages for State/local government surveyed in this regard were 100 and 73, respectively.

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Impact of Pension and OPEB Liabilities on State’s Budgetary and Financial Outlook and Credit Ratings
State Pension and OPEB Costs as an Increasing Portion of State Expenditures In order to provide a baseline for the potential budgetary and funding implications of continuing current approaches and practices, Schedule 10 provides actual and projected expenditures for a 40 year period related to the State budget and contributions to SERS, TRS and OPEB. Schedule 10 also provides available actual and projected funding ratios, where available. The projections for future years in the schedule involved making certain assumptions, which are outlined in the notes to the schedule. These assumptions include: State expenditures will grow at 4.75 percent per year, the average from 1992 through the 2014 projection amount; SERS contributions will reflect the Cavanaugh Macdonald projections using the current funding method;
TRS contributions and POB debt service based on a 2007 contribution schedule done for the State by the Public Resources Advisory Group (PRAG) and the debt service schedule from the

Treasurer’s Office; and OPEB state costs to increase by 10 percent per year. This last assumption is based on the average increase for 2000 to 2009 of 11.2 percent per year.
As indicated in Schedule 10, the costs for SERS, TRS and OPEB grew from 5.57 percent of budgeted expenditures in 1992 to 11.24 percent of expenditures in the current year, fiscal year 2010-11. These costs grew by an average of 8.8 percent per year during from 1992 to 2011. Using the assumptions described above, annual costs for SERS, TRS, and OPEB are projected to reach 18.97 percent of the budget in fiscal year 2032. The growth for fiscal year 2012 alone is almost $270 million higher than that expended in these areas in the current fiscal year. The challenge for the State will be to balance the need to increase the funding ratio of its pension and OPEB plans with the need to manage its overall budgetary needs. These increasing costs could crowd out additional investments in education, infrastructure, health care, and other critical areas.

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Chart 5
Pension and OPEB Actual and Projected Costs as a Percentage of State Expenditures

(from Schedule 10)
20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00%

Column1 Projected

FY92 FY95 FY98 FY01 FY04 FY07 FY10 FY13 FY16 FY19 FY22 FY25

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Schedule 10

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Impact on Financial Outlook and Credit Ratings Demographic factors must be considered when analyzing and seeking solutions to the State’s pension and OPEB liabilities. Nationwide and in Connecticut, the ratio of active workers to retirees will continue to decline as the baby boom generation ages, leaving fewer workers to pay for amortization of past liabilities. Connecticut’s state spending growth has outpaced its population growth, increases in gross state product, and income growth over the past several decades. Although job growth in the State has lagged that of the nation, Connecticut residents’ income growth has outperformed national growth over the long-term. In fact, Connecticut continues to have the highest per capita income in the nation. Commission members have noted, however, that there is a growing income disparity, in which those at the higher end of the income scale have seen their incomes rise rapidly through the years in contrast to those in the lower and middle income levels.
Connecticut was 5 highest in terms of state taxes per capita in 2009, while it was 19 highest in terms of state taxes as a percentage of income. For total state and local taxes, Connecticut was 5 highest on a per capita basis and 11 highest in terms of per capita taxes as a percentage of income. The bond rating agencies give a third-party view of Connecticut’s financial to potential creditors. These bond ratings have an impact on how much the State will pay in interest on the bonds it issues to pay for capital projects. The rating criteria used by the agencies include the following factors: the State’s economy; debt structure; financial condition; demographic factors; and management practices of the governing body and administration. The three major rating agencies have Connecticut rated in the middle tier of the high quality category (Moody’s: Aa2; Fitch AA; and Standard and Poor’s: AA). The best quality category is marked by those with AAA ratings. Fitch had temporarily raised Connecticut’s bond rating to AA+ but reduced it in 2010 to AA based on the state’s budgetary problems. In a recent article about pension funding, Standard and Poor’s noted that the decline in public pension fund assets, which has occurred across the country, is contributing to the type of budget distress that States are experiencing. A separate report also asserted Standard and Poor’s position that pension liabilities and the costs associated with them on an annual basis are an important credit factor. Rating agencies are interested in the steps states are taking and the overall plans they have in place to address these liabilities, which they understand must be funded over time.
th th th th

In addition to appropriate planning, ratios and other measures are used by the rating agencies to determine the level of flexibility states have to address their fiscal challenges. In this regard, Standard and Poor’s July 8, 2010 report indicated that Connecticut has the second highest combined debt and pension unfunded liability per capita as a percent of income in the country. High liability levels reduce the State’s flexibility to address other critical services and investments to maintain Connecticut’s competitive advantage.

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Actions Taken in Other States Regarding Pension and OPEB Liabilities
The Pew Report noted that fifteen states passed legislation in 2009 to reform some aspect of their state run retirement systems, compared with twelve states in 2008 and eleven in 2007. Legal restrictions regarding reducing benefits for current employees shifted many of the changes to benefits for new employees. Ten states increased the contributions made by current and new employees to their benefit systems, while ten states lowered benefits for new employees or set higher retirement ages or longer service requirements. A 2009 report from the Center for State and Local Government Excellence indicates that a number of states have amended their retiree health plans to address the related costs and liabilities. Changes have included higher premium shares, higher deductibles, higher co-payments and more years of service to qualify for retiree health coverage. Pew places the changes into five general categories: Keeping up with funding requirements; Reducing benefits or increasing retirement age; Sharing the risk with employees; Increasing employee contributions; and Improving governance and investment oversight.
The range of actions taken by other states to address pension and OPEB liability issues was gathered by the National Conference of State Legislators, which actions are summarized in Appendix 3.

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Potential Strategies to Address Pension and OPEB Liabilities and Costs
Pension Plans Overall Strategy
The size of State’s unfunded pension liabilities are a result of many factors. The early approach to the SERS Plan was pay-as-you-go, there was no prefunding of future benefit payments. Even after a decision was made to prevent the growth of the unfunded liability and to amortize the past liabilities over time through payment of the ARC, little progress has been made in improving the Plan’s funding ratio for the reasons described in this report. This has recently been exacerbated by losses in asset values, which affected plans throughout the country. Using the current funding strategy, the funded ratio is projected to drop from its June 30, 2008 level of 52 percent down to 46 percent as of June 30, 2010 based on preliminary projections done by Cavanaugh Macdonald.

Cavanaugh Macdonald also projected that the ARC for fiscal year 2012 will be $185 million higher than the contribution being made in the current year, and will grow each year thereafter until the unfunded accrued liability is fully amortized. Even with these growing ARC amounts, the funding ratio is projected to decrease further over the next few years and not rise above 46 percent until 2016, based on the current calculation methods. Given the State’s serious budgetary challenges over the next several years, and the pressure that the growing costs of the State’s retirement systems place on other budgetary needs, a number of approaches need to be considered to reduce the unfunded pension liabilities of the State. Consideration should be given to new funding strategies, financing alternatives, plan design and benefit modifications. It is critical in the Commission’s view, to reinvest any benefit related State ARC savings into reducing the plan’s unfunded liabilities.
Finally, the Commission discussed the potential benefits and drawbacks of creating a defined-contribution plan in lieu of a defined-benefit plan for new employees, or a hybrid plan that would include both a defined-benefit and defined-contribution component for these employees.
It is important to note that there are Commission members who did not agree with some of the strategies presented below in regard to the State pension and OPEB plans. Also, the Commission did not seek to prioritize these strategies. The main goal of this report has been to provide information and potential approaches to addressing these liabilities to policy-makers and stakeholders.

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Funding Strategies Paying the Annual Required Contribution (ARC) Paying the ARC calculated under accepted actuarial standards and a carefully structured funding policy, each and every year, would put the state on a surer path towards reducing and eventually eliminating its unfunded pension liabilities and limiting further growth in these liabilities. When the ARC is not fully contributed, the State falls behind in improving its funding, which in turn increases future ARC costs. The State also loses the investment income assumed to be achieved on the timely payment of the calculated ARC.
1) The State should, each year, make the full ARC payment determined by its plan actuaries in accordance with accepted actuarial principles and the State’s funding plan.

Calculating the ARC In addition to paying the ARC each year, it is critical for the State to review how the ARC is calculated. Some of the issues, which have been described in this report, include: Approaches to Calculating the ARC: Level Percent-of-Payroll vs. Level Dollar. The State, like many other public plans, uses the level percent-of-payroll approach to calculate the amortization component of the ARC for its three major plans. This approach back-loads the amortization of the unfunded liabilities, resulting in steady increases each year in the ARC and slower progress in improving a plan’s funding ratio. In contrast, the level dollar amortization approach, as demonstrated by the Cavanaugh Macdonald projections (see Schedule 11 below), increases the funding ratio more rapidly and achieves budget stability through smaller annual increases in the ARC. The ARC is significantly higher in the earlier years with the level dollar approach.
Another issue of great concern involves the reductions made to the ARC based the interpretation that has been given to certain provisions of SEBAC IV and SEBAC V. For the past ten years, the reductions to the ARC related to these agreements total nearly $820 million, and likely total $1.0 billion or more for all of the years of the agreement period. The impact of these reductions is a further back-loading of the payment schedule and an accompanying lack of progress in improving the funding ratio of the Plan. Exacerbating this concern is that the SEBAC 2009 agreement allowed for additional reductions in pension contributions of $314 million over the period of fiscal years 2009 to 2011.

While difficult to achieve from a budget standpoint, the Cavanaugh Macdonald projections found in Schedule 11 demonstrate that payments beyond the current ARC levels would have a significant impact of improving the State’s funding position and lowering its annual budget costs in the long-term.

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Schedule 11: Comparison of ARCs, Funding Ratios, Level Percent of Payroll vs. Level Dollar Methods

(000’s) (taken from Appendix 4 of this report)
Fiscal Year Ending Level Percent of Payroll ARC Appendix B Attachment 2 Level Percent of Payroll Funding Ratio Appendix B Attachment 1 Level Dollar ARC Appendix B Attachment 2 Level Dollar Payroll Funding Ratio Append. B Attachment 1 Difference in ARC: Level $ minus Level % Difference in Funding Ratio Level $ minus Level %

6/30/12 6/30/15 6/30/18 6/30/21 6/30/24 6/30/27 6/30/30 6/30/33 6/30/36

1,029,991 1,272,116 1,438,420 1,645,126 1,895,189 2,217,889 2,670,732 3,839,879 326,738

45.8% 42.8% 46.2% 49.9% 55.0% 62.1% 72.9% 89.8% 100.0%

1,393,288 1,558,482 1,570,442 1,593,733 1,618,180 1,657,110 1,720,765 2,013,616 326,738

45.8% 47.7% 55.3% 62.1% 68.8% 76.0% 84.4% 94.9% 100.0%

363,297 286,366 132,022 (51,393) (277,009) (560,779) (949,967) (1,826,263) 0

N/A 4.9% 9.1% 12.2% 13.8% 13.9% 11.5% 5.1% 0%

Note: The actuaries’ application of SEBAC IV and V reductions are reflected in all of the above projections.
Actuarial Assumptions, including Investment Return/Discount Rate Assumption. If the actual investment returns are lower than those assumed in the actuarial valuation, the result will be a growth in the unfunded liabilities and the ARC going forward. In comparing Connecticut to other states, our assumed rate of return of 8.25 percent is higher than the 8.0 percent or below that is assumed by thirty-nine other states. The real rate of return (total return less inflation) assumed by Connecticut is near the median of statewide assumptions.
A lower investment return rate would reduce the impact of a loss in plan asset values, but would increase the amount of the ARC. The actuarial rate of investment returns for SERS for the past decade have generally been below the actuarial assumed rate, and will remain below this level for a number of years as 2008 investment losses are incorporated into the calculations of the actuarial rate of return. While the investment return assumption is important, this assumption must be viewed in the context of all of the assumptions used in calculating actuarial liabilities.

2) The State should eliminate the reductions in ARC payments as has been interpreted in SEBAC IV and V.
3) The State should consider decreasing its assumed rates of return and inflation to reflect more realistic and conservative expectations about the economy and capital markets. 4) The State and SEBAC should adopt a more rigorous funding strategy targeted at achieving specified minimum funding ratios over time. This enhanced funding could be financed through additional state and employee contributions and plan modifications.

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An example of such targeted funding ratios follows: Targeted Funding Ratio Fiscal Year Ending 6/30/15: Fiscal Year Ending 6/30/18: Fiscal Year Ending 6/30/21: Fiscal Year Ending 6/30/24: Fiscal Year Ending 6/30/27: 47.5 percent 55.0 percent 62.5 percent 70.0 percent 75.0 percent Projected Ratio: Current Method 42.8 percent 46.2 percent 49.9 percent 55.0 percent 62.1 percent

5) The State should consider adopting a funding policy which addresses both Tier I legacy liabilities and ongoing accruals for Tiers II and IIA. One possible strategy is to install a contribution minimum. The minimum amount contributed to the SERS fund in a given year by the State shall not be less than the sum of expected benefit payments to Tier I retirees and the employer normal cost for Tiers II and IIA. 6) The State should require that each pension and OPEB valuation contain a projection for each year of the remaining amortization schedule, thereby highlighting the longterm impact of its funding practices. Employee Contributions to the Fund As described earlier in this report, hazardous duty employees in Tiers II and IIA contribute 4 percent and 5 percent, respectively, towards the SERS Plan, while other Tier II employees contribute nothing and Tier IIA employees contribute 2 percent. Other New England states have employee contribution rates of between 5.1 percent and 8.75 percent for nonhazardous duty employees. Increasing employee contributions is among the strategies employed in a number of states to address these liabilities. Based on an active employee payroll of almost $3.2 billion preliminarily projected by Cavanaugh Macdonald for the period ending June 30, 2010, each 1 percent increase in average employee contributions would add $32.0 million in contributions. These contributions likely could be made on a pre-tax basis, thereby mitigating the impact on employees.
While the State is currently experiencing serious and continuing budgetary challenges, there have been provisions proposed and/or enacted in the past to dedicate a portion of operating budget surpluses to addressing pension, OPEB or other long- term liabilities. The longer-term positive impact on pension, OPEB and other liabilities of consistent and significant funding above the current ARC has been demonstrated by actuarial work done for the Commission. Another approach, reportedly considered in Massachusetts, is to dedicate a portion of cyclical revenues (e.g., capital gains tax) to a pension and/or OPEB trust when these revenue sources go above a certain levels.

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7) The State and SEBAC should consider increasing employee contribution rates to levels found in other states, taking into account differing benefit levels and plan funding ratios. A study may be needed to determine appropriate levels of cost sharing between employer and employee. Such additional contributions should go towards moving the State fully or closer each year to achieving the recommended minimum funding ratio targets. 8) In addition to the State meeting its obligation to pay the ARC each year, a mechanism for dedicating a specified proportion of future operating budget surpluses or large increases in cyclical revenue sources towards the pension and OPEB liabilities should be enacted.

Pension Obligation Bonds
Pension Obligation Bonds (POBs) are generally defined as a type of general obligation bond issued to reduce the unfunded liabilities of a defined-benefit pension plan. POBs can help a government to lower its costs of carrying an unfunded liability, particularly when: (1) the cost of issuing POBs is lower than the cost of carrying the unfunded pension liabilities at the plan’s assumed rate of return; and (2) the rate of return on the amount borrowed and ultimately invested is greater than the interest on the bonds (which, according to federal tax law, are taxable). An important element of this approach is that the government issuing the POBs should continue to pay the actuarially recommended contribution (ARC) associated with whatever unfunded liability remains after the bond issuance. Some issuers have used POBs to fund their current contribution, and this can add to budget instability.

POBs have been issued by a number of governmental entities across the nation, including several municipalities here in Connecticut. In 2008, the State of Connecticut issued POBs in order to reduce the unfunded liability of the Teachers’ Retirement System (TRS) and to ensure future funding through a bond covenant. Current market conditions suggest that POBs for SERS could be issued at a taxable rate of approximately 5.75%. Consequently, an issuance of POBs would be feasible only if a number of conditions were satisfied, chief among them: the average rate of return over the life of the bonds must exceed the cost of borrowing by an acceptable margin. As a frame of historical reference, the SERS’ annualized net return for the period ended June 30, 2010 was 12.93% for the 2010 fiscal year; 2.89% for ten years; 6.71% for fifteen years; 7.08% for twenty years and 8.02% for twenty-five years. These figures reflect the extraordinary global economic crisis in 2008 and 2009, which resulted in a -18.3% return for fiscal year 2009.
The economic conditions and experiences that justified Connecticut’s issuance of POBs in the

Spring of 2008, may not now exist for SERS. Prospects for long-term investment returns have moderated following the financial meltdown of the fall of 2008, and leading indicators suggest very slow economic growth following the ensuing recession. Consequently, a number of factors suggest that the issuance of POBs to reduce the unfunded liability of SERS may be unwarranted at this time. Among them:

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Impact on State Debt Levels: The issuance of POBs for SERS would increase the State’s debt levels. Given that Connecticut already has relatively high debt levels, the Governor and legislature must consider any POB in the context of other competing priorities for bonding during a period of budget stress. Financial Flexibility: The issuance of POBs converts the State’s commitment to fund annual pension contributions for a portion of the unfunded liability to a fixed debt liability. When the State issued POBs for the TRS, one of the primary objectives was to bind the State to fully funding the ARC going forward, allowing the fund to gain the benefit of compounding of investment earnings over time and to end the practice of chronic underfunding. However, in the case of SERS, under its labor agreements in effect through 2017, the State has already committed to fully fund the ARC annually -although the State has recently negotiated reductions in such payments.
Rating Agency Views: The State needs to consider how a POB for SERS could be viewed by rating agencies given the State’s existing debt levels. Since the rating agencies already include unfunded pension liabilities in the State’s total long-term obligations, these liabilities are already accounted for, but POBs will be considered a hard liability. If the State issues bonds to fund current pension contributions, it would be considered a deficit financing by the credit rating agencies. The State did not use the POBs issued in 2008 to fund current contributions for TRS.

Prospect for Long-Term Investments Returns: The potential benefit of a POB is the spread between the POB debt cost and the long-term return on assets. The State needs to consider the risk of earning certain levels of future investment returns in the near and long-term and incorporate that into any decision to issue POBs. If the State does not earn at least the debt cost over the long-term through the investment of proceeds from the issuance of POBs, then the transaction will result in dissavings.
9) Pension Obligation Bonds, if properly structured and timed, could help a government to lower its costs of carrying an unfunded pension liability, but there are a number of issues and risks that must be carefully considered before issuing bonds for this purpose. A number of factors, however, suggest that the issuance of POB’s may be unwarranted at this time.

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Plan Design and Benefit Modification Strategies Tiers II and IIA, the SERS plan benefits offered to employees hired after 1984 are, in a number of respects, reasonable in terms of a defined-benefit plan when compared to other states in New England. In reviewing the options outlined below, the Commission considered areas where modifications may be appropriate in light of similar provisions in other governmental plans. The need to consider modifications, however, is based on the need to make these plans sustainable for the State, its employees and taxpayers. As noted previously, the State’s funding progress is among about the worst in the country. The Commission considered the degree to which employees have made future plans based on the plan provisions as they now exist. This becomes a greater issue, the closer an employee is to retirement. The impact of the disruptions and serious declines in the financial markets, however, will likely cause many individuals to delay their retirement age throughout our state and country. The economic downturn has also challenged the ability of governments to pay for commitments made to both its employees and its citizens. Conducting Actuarial Valuations of Proposed Plan Changes, Early Retirement Programs and Other Major Actions
A major goal for the Governor in creating the Commission was to increase the level of transparency and understanding of pension and OPEB liabilities and costs. During a budgetary crisis or legislative session, the ability to undertake a full vetting of the impact of changes affecting pension or OPEB liabilities, can be limited. This type of information, however, is necessary for elected officials and the public, in terms of assessing the short and long-term impacts of actions contemplated in these areas.
10) A mechanism should be established to require and obtain independent actuarial information regarding the impact of plan changes and other major actions affecting pension and OPEB plan liabilities for each of the years remaining in the plan’s current amortization schedule prior to the enactment of any such changes or actions. Any change that increases a plan’s unfunded liability should be accompanied by a funding strategy to fully address such increased liability.

11) The State should seek to avoid future retirement incentive programs, unless: 1) a multi-year actuarial analysis is first undertaken and 2) a method of funding any actuarial losses is identified and implemented. Increasing Retirement Age or Providing Incentives to Retire Later; Other Pension Benefit Modifications
The Federal Reserve Bank of Boston recently reported that traditional pension plans for most state employees in New England discourage continued work at older ages. This places stress on plans as people live longer and involves the macroeconomic question of how a proportionately smaller workingage population can support the unfunded liabilities of a proportionately larger retirement population.

While Connecticut’s percentage of final average salaries paid under Tier II and Tier IIA are lower than

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other states, these other states generally have a steeper reduction, greater than Connecticut’s 3 percent per year, for early retirements. Connecticut’s 3 percent reduction does not reflect the full actuarial impact of those retiring earlier. A related incentive to retire early is that Connecticut offers early retirees health insurance at a lower cost than if they kept working. The potential impact on total liabilities and ARC costs from delaying the age for early and normal retirements and increasing the reductions associated with early retirements was projected by Cavanaugh Macdonald. In addition to pension plan impacts, delaying the age of retirement would have an impact on the State’s OPEB liability because the State only pays for a supplemental plan once a retiree reaches Medicare eligibility. Actuarial estimates were requested for all of Tier II and all of Tier IIA actives under four scenarios: Scenario 1-Tier II, Non-Hazardous: Proposed Early Retirement Eligibility: Age 62 with 10 years of service (Current: Age 55, 10 years); Proposed Normal Retirement: Age 65 and 10 years or 70 and 5 (Current: 62 and 10, 60 and 25 or 70 and 5); and Early Retirement Reduction change from 3% to 6%. Scenario 2-Tier IIA, Non-Hazardous: Proposed Early Retirement Eligibility: Age 62 with 20 years of service (Current: Age 55, 10 years); Proposed Normal Retirement: Age 65 and 10 years or 70 and 5 (Current: 62 and 10, 60 and 25 or 70 and 5); and Early Retirement Reduction change from 3% to 6%. Scenario 3-Tier II, Hazardous: Eligibility of Retirement: 25 years of service (Current: 20 years of service) Scenario 4-Tier IIA, Hazardous: Eligibility of Retirement: 25 years of service and age 55 (Current: 20 years of service) The full schedules for these changes done by Cavanaugh Macdonald, and the baseline related to current plan are in Appendix 4. Schedule 12 below compares the ARC with each of these scenarios to the baseline related to the current plan, as well as a total for the four scenarios. Schedule 12-Comparison of ARCs for Scenarios 1 to 4 with Baseline Based on Level Percent of Payroll (000’s)
Fiscal Year Ending Scenario 1 ARC Scen. 1 ARC Savings Scenario 2 ARC Scen. 2 ARC Savings Scenario 3 ARC Scen. 3 ARC Savings Scen. 4 ARC Scen. 4 ARC Savings Scen 1-4 Total Savings

Baseline ARC

6/30/12 6/30/15 6/30/18 6/30/21 6/30/24 6/30/27 6/30/30 6/30/33 6/30/36

1,029,991 1,272,116 1,438,420 1,645,126 1,895,189 2,217,889 2,670,732 3,839,879 326,738

974,615 1,199,751 1,367,317 1,574,830 1,826,693 2,143,540 2,575,063 3,709,911 329,305

(55,376) (72,365) (71,103) (70,296) (68,496) (74,349) (95,669) (129,968) 2,567

1,008,257 1,238,826 1,403,752 1,610,540 1,856,527 2,172,387 2,618,229 3,783,185 298,188

(21,734) (33,290) (34,668) (34,586) (38,662) (45,502) (52,503) (56,694) (28,550)

993,993 1,229,189 1,403,933 1,611,453 1,851,637 2,163,483 2,605,127 3,762,792 324,923

(35,998) (42,927) (34,487) (33,673) (43,552) (54,406) (65,605) (77,087) (1,815)

1,008,094 (21,897) 1,233,628 (38,488) 1,387,500 (50,920) 1,584,579 (60,547) 1,838,965 (56,224) 2,164,932 (52,957) 2,625,400 (45,332) 3,782,279 (57,600) 288,752 (37,986)

(135,005) (187,070) (191,178) (199,102) (206,934) (227,214) (259,109) (321,349) (65,784)

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While the changes described above would likely have some overall positive impact on the plan’s funding ratio, “reinvesting” the ARC savings into the plan would help Connecticut reach the minimum funding ratio targets.
12) The State and SEBAC should consider raising the retirement age for those in Tiers II and IIA and increase the reductions related to early retirements in order to achieve ARC savings, which should be applied towards achieving the recommended minimum funding ratio targets.

In order to test the impact of certain proposals on the ARC, Cavanaugh Macdonald provided actuarial projections, using the 2008 valuation data (which does not reflect the 2009 Retirement Incentive Program and other changes since 2008), with respect the potential changes described below. Actuarial estimates were only requested for Tiers II and IIA since, at this point, it was considered to be too late to consider changes in Tier I. Schedule 13: Impact of Various Benefit Changes
Potential Change for Currently Active Employees Tier II-Final Average Salary based on last 5 years (not current three) Tier IIA-Final Average Salary based on last 5 years (not current three) Tier II-COLA capped at 2.0% Tier IIA-COLA capped at 1.5% Tier II-Maximum Pension-$150,000 Tier IIA-Maximum Pension-$125,000 % Change in Normal Cost (0.17%) (0.09%) (0.35%) (0.29%) Liability decrease too small for impact on ARC $ Savings in ARC-1 Year (Savings would grow as ARC grows) $17.4 million $4.7 million $30.4 million $15.9 million $.5 million $0
st

% Change in ARC (0.48%) (0.13%) (0.84%) (0.44%) (0.01%)

Based on the time and costs related to obtaining actuarial estimates, projections were not obtained for all potential changes, including those related to spiking, rates charged for additional years of service for military, local government or other service, and others being implemented in other states (see Appendix 3).
13) The State and SEBAC should consider plan modifications in order to achieve ARC savings, which should be applied towards achieving the recommended minimum funding ratio targets.

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Defined Contribution and Hybrid Plans for New Employees Another issue considered by the Commission is how to prevent the problems that have been described above with defined-benefit plans from being perpetuated going forward. While less significant at this point in time than Tier I, the unfunded liabilities related to Tiers II and IIA have been growing and will continue to grow unless properly funded.
The Commission had significant discussions regarding the pros and cons of definedcontribution plans. The main advantage for the State of a defined-contribution plan is that its liability would be limited to a known and fixed percentage of payroll. Under a defined-contribution plan, the risks associated with not realizing the assumed investment returns and not adequately saving for future costs moves from the State to the employee, significantly impacting an employee’s ability to retire during difficult economic times. An advantage of defined-contribution plans is that they are portable for those who change jobs or leave State service with relatively few years of service.

Defined-benefits plans typically have the advantage of professional investment management and have been shown to provide benefits at a significantly lower administrative cost. Defined-benefit plans also provide lifetime incomes without the financial risk, for individual employees, of large market losses or of large individual withdrawals that can be associated with defined-contribution plans. Under a defined-benefit plan these risks are pooled and become the responsibility of the State and its taxpayers. Defined-contribution plans are the most prevalent plans for those employed in the private sector, primarily due to the profit-making nature of business, mobility of their workforces, and questions about the ongoing existence of some businesses. Eliminating the risk of large cost fluctuations and unfunded liabilities is an important concern for such businesses.
Defined-benefit plans remain the most prevalent plans for state and local governments, although there has been movement among some Connecticut municipalities towards providing defined-contribution plans. Some states, such as Michigan, have moved to a defined-contribution plan for new employees, while Georgia has created a hybrid or combination definedcontribution/defined-benefit plan for new employees. States such as Maine and Massachusetts have looked at this approach and have decided to remain with a defined-benefit plan, with some changes.

Hybrid plans often include a defined-benefit plan with a lower annual benefit amount supplemented by a defined-contribution plan. Hybrid plans have been viewed by some states and entities as a means of addressing, in part, the advantages and disadvantages to definedbenefit and defined-contribution plans that have been described above.
Connecticut’s Alternate Retirement Plan has an 8 percent of salary state contribution, with an employee contribution of 5 percent. The employer contribution percentage in a defined-contribution

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plan represents the employer’s cost for the benefits and is considered comparable to the normal costs as a percentage of payroll for a defined-benefit plan. The normal cost as a percent of payroll for SERS’

Tier IIA (from the June 30, 2008 valuation and the related actuarial assumptions) nonhazardous duty employees was 4.70 percent. The Tier IIA-non- hazardous duty percentage is projected to grow to 7 percent or so over time. The normal cost projections for Tier II-A indicate that the current level of benefits being accrued by new members of SERS are not as significant a problem as addressing financing the Tier I liabilities. The normal cost of a plan, however, does not reflect the need to amortize unfunded liabilities that have arisen from past funding shortfalls and continue to grow in many defined-benefit plans, including SERS.
A concern was raised that problems that could arise with the investment of plan assets by having a separate plan for new employees and a “closed” plan for current employees and retirees. Such a closed plan would need, over time, to shift more of its investments away from equities towards more fixed income to support a population of mostly retirees. The result would be that the State may have to increase contributions to the fund to make up for lower expected investment returns.

The Commission was in agreement that a move towards a different plan for new employees would have little or no impact on the State’s current liabilities, because past benefits would not be affected. Some of the members of the Commission, however, feel that Connecticut’s history regarding its non ARC-compliant contributions to the plan, offering retirement incentives and other actions requires that a defined-contribution or hybrid plan be considered, while other members feel that the Commission should not make recommendations based on an expectation of irresponsible State funding decisions. Those on the Commission who opposed a defined-contribution plan for new employees believe that such a plan would be more costly to the state and would not address the current unfunded liability problem, while providing lower and less secure retirement benefits to its employees. Those on the Commission who believed that a defined-contribution plan should be considered expressed significant concern that the problems and issues associated with the defined-benefit plan could be perpetuated going forward at a growing cost to the State, especially if the recommendations in this report are ignored.

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State OPEB Plan Overall Strategy
A significant challenge for the State going forward will be managing the cost of its retiree health care benefits. According to the most recent actuarial projection, for the period ending April 1, 2008, the total unfunded OPEB liability was $26.56 billion using a 4.50 percent discount rate, with an associated ARC of $1.94 billion. This ARC is more than three times the $595 million that the State is paying on a pay-as-you-go amount in the current year. As indicated previously, Connecticut’s 2008 actuarial accrued liability (AAL) related to its OPEB plan per capita is the fourth highest in the nation.

The challenge for the State is that until it can begin to significantly address this unfunded liability, it is destined to pay a higher amount each year for retiree health insurance for decades to come. From 2000 to 2009, the growth in the State’s actual costs was 11.2 percent per year. The overall strategy is to close the gap between the ARC and the amount contributed by the State and its employees. Connecticut’s goal should be to fully fund the ARC each year. In order to achieve this goal, Connecticut must find ways to reduce and move its AAL and ARC per capita for OPEB closer to the average levels found in other states. The range in the AAL and ARC per capita for New England states are listed below in Schedule 14. There three main reasons for the differences below are: 1) benefit levels and cost of plans; 2) retiree population covered; and 3) funding policy. Schedule 14: 2008 State OPEB AAL and ARC Per Capita: New England States (Pew Report, February 2010) 2008 OPEB AAL Per Capita 2008 OPEB ARC Per State (as % of Per Capita Income) Capita 2008 Funding Ratio Connecticut* $7,428 (11.8%) $491 0% Maine 3,334 (8.7%) 124 1.2% Massachusetts 2,339 (4.1%) 128 1.8% New Hampshire 2,443 (5.1%) 203 5.4% Rhode Island 748 (1.7%) 44 0% Vermont 2,606 (6.1%) 173 0.2% *The figures in the 2008 Pew Report figures for Connecticut reflected a 4.50 percent pay-asyou-go discount rate. As with the Pension plan, the major strategies will fall into two categories, funding and plan design and methods of addressing the size of the liabilities. Prefunding in a Trust Fund
The only portion of the ARC that has traditionally been funded by Connecticut is the pay-as-yougo amount for benefits received by existing retirees. The two basic components of prefunding are: (1) establishing a trust specific to OPEB and (2) making annual contributions to the trust that would exceed

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current year costs. If these additional funds accumulate and remain in the trust for a significant amount of time, this would result in a lower actuarial accrued liabilities (AAL) and ARCs, as investment returns would become a significant source of benefit funding. The extent of the impact depends upon the amount contributed to the trust each year.
If it is assumed that the $17 million related to the 3 percent contribution for employees with less than 10 years of service (now estimated at $23 million) were to be placed in the trust, the ARC would decrease from $1.94 billion to $1.787 billion. If the State were to contribute another $50 million to the trust beyond the $17 million, the ARC is projected to further decrease to $1.606 billion.
1) The State should consider further increasing its contributions into the OPEB trust fund. This should include contributing to the OPEB Trust Fund a designated portion of future budget surpluses.

2) The State and SEBAC should consider increasing the level of employee contributions into the OPEB trust fund. Any increase in employee contributions should go towards prefunding the trust fund and not towards current costs.
Schedule 15: OPEB Liability and ARC Breakdown 4/1/08 Valuation Preliminary Results
Details of Accrued Liability and ARC ($000s)
Accrued Liability (AAL) Tier I Actives $390,370 Member pre-65 956,216 Member post-65 280,517 Dependant pre-65 792,280 Dependant post-65 0 Retirees Totals $2,419,383 ARC Member pre-65 Member post-65 Dependant pre-65 Dependant post-65 Retirees Totals Tier I Actives $23,073 53,474 16,921 44,137 0 $137,605 Tier II, IIA, and Non-SERS Actives $2,191,145 4,451,485 1,732,675 3,853,905 0 $12,229,210 Tier II, IIA, and Non-SERS Actives $250,333 483,235 203,525 423,551 0 $1,360,644

Discount Rate= 4.50% Pay-as-you-go*
Total Active $2,581,515 5,407,701 2,013,192 4,646,185 0 $14,648,593 Terminated Vested $737,155 1,223,080 587,689 946,979 0 $3,494,903 Terminated Vested $27,469 45,575 21,899 35,287 0 $130,230 In- Pay Status (Retirees) $0 0 0 0 8,423,446 $8,423,446 In-Pay Status $0 0 0 0 313,879 $313,879 Total $3,318,670 6,630,781 2,600,881 5,593,164 8,423,446 $26,566,942 Total $300,875 582,284 242,345 502,975 313,879 1,942,358

Total Active $273,406 536,709 220,446 467,688 0 $1,498,249

*With the 5.02% discount rate related to the original estimate for the 3.0% employee contribution up through ten years of service, the AAL would be lowered to $24.020 billion and the total ARC to $1.787 billion. Increasing the Age that Retirees Begin Receiving Retiree Health Insurance
The macroeconomic issue raised in the Federal Reserve Bank Report of people living longer and the number of years spent in retirement needs to be addressed with respect to OPEB plans as well. As shown in Schedule 15, $493 million ($273 million Member plus $220 million Dependant) of the $1.942 billion ARC using a 4.50% discount rate, is related to projected pre-65 retiree health benefits for active employees and their dependants. Increasing the early and normal retirement ages, along with the

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reduction per year for early retirement, on the pension side should also result in OPEB savings. The age and years of service required for eligibility for pension and retiree health insurance could be further decoupled, as was done recently for some employees with the institution of the “Rule of 75”.

3) The State and SEBAC should consider, beyond increasing the early and normal retirement age for retirement eligibility, whether other steps, such as moving to a “Rule of 80” for all active employees, are needed to reduce the AAL and the ARC associated with the projected pre-65 health benefits for active employees. Modifying Provisions Related to Terminated Vested Employees
As indicated in Schedule 15, almost $3.5 billion of the AAL and approximately $130 million of the ARC, using a 4.50 percent discount rate, is related to terminated vested employees. Terminated vested employees have left State service with at least 10 years of service, but have not yet started collecting retirement benefits. At the point that they do begin receiving pension payments, they will also begin receiving full health care benefits. The Rule of 75 will help to lower the liabilities cited above for terminated vested employees, but additional steps for consideration include:

Require that only employees going directly into retirement from state employment be eligible for retiree health benefits; Move to a Rule of 80 for all employees, not just with those with less than 10 years of service as of July 1, 2009; Reduce the portion of premium paid for each year of service below 25 years. There are legal questions regarding changes the State can implement for this group of former employees that may need further review. 4) The State and SEBAC should consider additional methods, such as requiring that only employees who go directly into retirement from state employment be eligible for retiree health benefits and moving to the Rule of 80, to reduce the AAL and the ARC associated with terminated vested employees. Increasing Premium Cost Sharing As indicated in Schedule 15, $14.6 billion of the $26.6 billion in OPEB AAL relates to projected future benefits of current employees and their dependants. Approximately 45.5 percent of this liability relates to dependant coverage. One approach used in a number of other states to address this liability is to increase the level of premium sharing, currently minimal under Connecticut’s plans. An advantage of adding a greater level for premium sharing for spouses and dependants is that it would increase the incentive for these individuals to consider joining other plans that are available to them, such as through their own employer. The options for premium sharing changes include: Requiring retirees to pay the same premium share as active employees;

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Have dependants pay a higher premium share amount than employee members; and Reduce the portion of the premium paid by the state for each year of service below twenty-five years. The level of premium sharing could be different for pre and post 65 members and/or dependants.
For states that provide access to their plan with the retiree and/or their dependants paying some, or all, of the premium, there is still an “implicit subsidy” and liability associated with letting higher cost retirees participate in the plan. This may be less of an issue in Connecticut, which sets different rates for active employees and pre-65 retirees based on the separate experience of these two groups. A concern with increased premium sharing is that those with lower income will contribute a higher portion of their income than those with higher incomes. 5) The State and SEBAC should consider increasing premium sharing for retiree health benefits, which could vary based on whether the participant is a member or dependant and/or is pre or post-65, in order to reduce the AAL and the ARC. The premium share could also vary based on the number of years of service, similar to pension plans.

Health Care Cost Benefit Management
As indicated previously, the level of the AAL and the ARC are sensitive to the actuarial assumptions used in doing the valuation for OPEB plans. A one percent reduction in annual health inflation below the assumed level is projected to lower the ARC from $1.942 billion to $1.561 billion. A one percent increase above the trend would also have a significant impact in the other direction. Connecticut historically has utilized plan design changes to reduce health care costs. Efforts are underway, including the state employee health plan, to demonstrate new methods of service delivery, such as the implementation of medical homes. The savings currently achieved by a provision in the 2009 SEBAC agreement leading to a higher percentage of employees purchasing generic drugs is an example of cost saving efforts underway. The biggest, and most important, challenge with health care reform is

“bending the cost curve.” 6) The State and SEBAC should continue to work on methods, including through plan design changes and improvements in service delivery approaches, to identify and implement actuarially verifiable methods of reducing health care costs.

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Conclusion
Connecticut’s unfunded liabilities and funding ratios related to its post-employment benefit plans for its employees and retirees are among the worst in the nation. These unfunded liabilities have led to increasing annual costs which have been outpacing of the growth in total State expenditures. These escalating costs put pressure on or squeeze out other budgetary priorities, including investments in human and physical capital needed to maintain our infrastructure and quality of life and to attract new businesses and jobs to the state. Lower credit ratings and higher borrowing costs are a potential outcome if changes are not made. Unfortunately, these liabilities and associated annual costs will only continue to get worse if additional actions are not taken soon. While this report outlines a number of the many causes of our current situation, it more importantly offers a series of balanced and responsible strategies for consideration to mitigate these growing unfunded liabilities. The strategies, frankly, call for the State, its employees and all stakeholders to continue to participate in finding and implementing solutions—ones that will involve tough choices today in order to avoid tougher ones later on.

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Appendices

Page Appendix 1 – Governor M. Jodi Rell, Executive Order No. 38 Establishing the State PostEmployment Benefits Commission…………………………………………………………………………. A-1 Appendix 2 – Summary of Plan Provisions, State Employee Retirement System (SERS)……………….. A-2 Appendix 3 – Summary of Changes Made to Pension Plans and Other Post Employment Benefit (OPEB) Plans by States in 2010…………………………………………………………………………………. A-8 Appendix 4 - Actuarial Projections Related to SERS by Cavanaugh-Macdonald Consulting LLC, August 2, 2010………………………………………………………………………………………………………… A-15

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List of Major Information Sources
1) Actuarial Valuations of the State Employees Retirement System (SERS), Teachers Retirement System (TRS) and State Other Post-Employment Benefit (OPEB) Plans from 2000 to 2008

2) Actuarial estimates and projections related to SERS and OPEB done in the spring and summer of

2010 by the plans’ actuaries (Cavanaugh Macdonald-SERS; Milliman-OPEB) 3) Collective Bargaining Agreements between the State of Connecticut and the State Employee Bargaining Agent Coalition (SEBAC) 4) State of Connecticut, Office of the State Comptroller, Comprehensive Annual Financial Reports, Fiscal Years 1996-2009 5) State of Connecticut, General Assembly’s Office of Fiscal Analysis, Budget Books, Fiscal Years 1992 -2009; May 2010 projections for fiscal years 2010-2014 6) Fiscal Year 2011 Midterm Economic Report of the Governor, State of Connecticut, Office of Policy and Management, February 3, 2010 7) Connecticut Municipal Audits for Fiscal Year Ending June 30, 2008 submitted to the State Office of Policy and Management 8) “The Trillion Dollar Gap: Underfunded State Retirement Systems and the Roads to Reform”, The Pew Center on the States, February 2010 9) Public Fund Survey-Summary of Findings for 2008, National Association of State Retirement Administrators, October 2009 10) “Population Aging and State Pensions in New England”, New England Public Policy Center, Federal Reserve Bank of Boston, June 2010 11) Final Report of the Special Commission to Study the Massachusetts Contributory Retirement Systems, October 7, 2009 12) State Defined Contribution and Hybrid Pension Plans, National Conference of State Legislatures, June 2010 13) “Governmental Pension Contributions May Increase Due to New Guidance”, Moody’s Investors Service, July 6, 2010 14) “The Crisis in State and Local Government Retiree Health Benefit Plans: Myths and Realities”, The Center for State and Local Government Excellence”, November 2009
15) “Prefunding Other Post-Employment Benefits (OPEB) in State and Local Governments: Options and Early Evidence, The Center for State and Local Government Excellence, September 2009

16) “GASB 45 and other post-employment benefit promises: The fog is clearing”, New England Public Policy Center, Federal Reserve Bank of Boston, September 2007 17) Employer Health Benefits – 2009 Annual Survey, The Kaiser Family Foundation 18) Federation of Tax Administrators, 2008 State and Local Tax Collections/Burdens
19) “Pension Funding and Policy Challenges Loom for U.S. States”, Standard and Poor’s, July 8, 2010

20) Pensions and Retirement Plan Enactments in 2010 State Legislatures, National Conference of State Legislatures, July 19, 2010
Note: Additional sources of information are included on the Commission’s web-site, located at: http://www.ct.gov/opm/cwp/view.asp?a=2998&q=457846&opmNav_GID=1791

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UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

Anthony McKnight Sr. Plaintiff, v.

DATE: January 13, 2011

File NO. 3:10cv1471(MRK)

STATE OF CONNECTICUT/ Department of Corrections Department of Administrative Services Workers Compensation Commission Office of the Comptroller Defendants,

MOTION FOR INJUNCTIVE RELIEF
The Plaintiff, Anthony McKnight Sr., Pro Se and pursuant to applicable rules of Federal rules of Civil Procedure, files this an emergency motion for injunctive relief against the defendant, State of Connecticut and it’s agents as listed in the complaint/amended complaint.

The defendant(s) willful and flagrant violations of plaintiffs’ rights under Federal Disability Act, Civil Rights laws, State Civil, and Criminal laws should entitle the plaintiff to immediate relief. The repeated actions/inactions of the defendant continues to damage to plaintiff and plaintiffs family. Currently, defendant has threatened and harassed plaintiff with incarceration, and other implied threats and attempts to further defraud plaintiff of workers compensation benefits. (1) State o Connecticut Department of Social Services Bureau of Child Support Enforcement Letter.

This letter was issued by Social Services however Connecticut General Statutes 5-142(a) and 2- 257(a) specifically require the State of Connecticut to perform this function. The failure to perform this task by Dianne Pierpont does not shift the burden to the plaintiff nor should it require the incarceration of the plaintiff.

(2)

State of Connecticut Department of Social Services, November 23, 2010 Redetermination Appointment (food stamps).

This letter was issued by Social Services requiring the attendance of the plaintiff in contrast to specific requests by the plaintiff for “mail-in” determinations (a) (b) (c) Requiring the plaintiff to assign monies to the state. Requiring the plaintiffs’ Acceptance of substandard medical care. Requiring plaintiff to trade off 5-142(a), 5-169(i), and 5257(a) entitlement benefits for a lesser social services discretionary benefit.

These actions by the agents of the state of Connecticut also violate fraud statutes. The defendant, State of Connecticut, through its agents terminating official Dianne Pierpont, now of The Department Social Services (formerly of Department of Corrections, the personnel officer primarily responsible for the mis-management of plaintiffs’ personnel file) and Michael Cicchetti (formerly Deputy to the Secretary, Brenda L. Sisco of Office Policy Management, primarily responsible for mis-management of plaintiffs’ workers compensation file) now of the State Department of Social Services are distributing mail which contain plaintiffs personal information protected under the Privacy Act to unknown individuals not to include known address which is not the residence of the plaintiff. Wherefore, the plaintiff in this complaint request from this Honorable Court the relief set forth in this motion.

Certification
Respectfully submitted this 13th day of January, 2011

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

Anthony McKnight Sr. Plaintiff, v.

DATE: January 25, 2011

File NO: Urban Outfitters, Inc. Nike, Inc., Drexel University Urbn Media, Muz WearUrbn Grmnts Urbn Yoga, Urbn Hotel,Urbn Pizza , Manhattan College. Urbn Culture Urb’n Essence Defendants

COMPLAINT Anthony McKnight created the theory of URBN in 2002 and has the exclusive right to the copyright, brand and trade. The defendants have violated the rights of plaintiff as set forth in The Copyright Act of 1790 as amended, and the First Amendment of the Constitution of the United States of America. (1). As defined Urbn, Urb’n, URBN, URB’N does not mean Urban, or URBAN. (2). The term or theory of Urbn was created in New Haven, Connecticut in 2002 (Appendix ‘A’).

(3). Urbn was first copyright and traded by Anthony McKnight (Appendix B, Items one and two). (4). Urban Outfitters in 2008/2009 infringed upon the exclusive copyright of Anthony McKnight as provided by Federal Law (Appendix C). (5). Urban Outfitters is in violation of the Plaintiff’s right to Freedom of Religion as provided in the First Amendment of the United States Constitution. (6). Plaintiff in 2002 began creating a vocabulary for Urbn of which the first word was (a.) Urbn, and defined by it’s creator Anthony McKnight, word two (b). Awtuhm, and word three (c) Duv (Appendix B) (7). The defendants in this petition cannot define the meaning of the brand, trade or copyright they have infringed upon. (8). The defendant, Urban Outfitters was given notice to cease and desist in the violation of the Urbn brand copyright (Appendix D).. (9). Urban Outfitters in 2010 negotiated/sold the rights to unlawfully reproduce the URBN brand lable to Nike of North America (Appendix E).

(10). Neither Urban Outfitters or Nike have an agreement with the plaintiff to reproduce the brand name Urbn. (11). The Urbn brand/trade/copyright was first distributed to the public in 2003 in Wilmington, Delaware. (12). The Plaintiff in this claim from contends that from 2003 until 2009, consecutively, he has marketed the brand/trade/copyright in the following cities to the African American Communities while homeless : Beaumont, Philadelphia, District of Columbia, Baltimore, Boston, Cleveland, Cincinnati, Indianapolis, Memphis, Chattanooga, Hattiesburg, Mobile, Shreveport, New Orleans, Atlanta, Dallas, Houston, Fort Worth, KilleenFort Hood, Waterloo, Oklahoma City, Phoenix, New Mexico, Los Angeles, San Francisco, Portland, Seattle, Idaho, Denver, Minneapolis-St. Paul, Milwaukee, Chicago, Detroit, New York (nyc), Buffalo, Rochester, Raleigh, Louisville, Columbia, S.C. etc.., and countries such as Kuwait, Paris, London, Japan, Jamaica, Afghanistan, Iraq, among other places. This was done prior to the infringement by both Urban

Outfitters and NIKE, and other defendants named in the complaint. . (13). Urban Outfitters willfully and with forethought along with Nike, unlawfully sold and sells the Urbn brand and copyright without the permission of Anthony McKnight.

WHEREFORE, the plaintiff in this matter petitions this court for: (1). An Order for Injunctive Relief from Urban Outfitters, Nike and other named defendants against any further reproductions and/or infringements upon the name URBN, Urbn, Urb’n, URB’N. (2). An Order requiring the defendants to produce complete accountings of all monies derived from the unlawful infringement of the copyright, brand name Urbn.

By_____________: ____ Anthony McKnight P. O. Box 304 West Haven, Connecticut 06516

CERTIFICATION
This is to certify that a copy of the foregoing complaint has been sent via U.S. Mail, To: Urban Outfitters, Corporate Headquarters at Urban Outfitters, Inc. 5000 South Broad St Philadelphia, PA 19112-1495. To: NIKE Inc, World Headquarters, Attn: Legal Department, One Bowerman Drive, Beaverton, Oregon 97005. To: URBN Coal Fired Pizza, 203 Main Street. Vista. California 92084, To: URBN Coal Fired Pizza / Bar 3085 University Avenue. San Diego. California 92104, To: URBN Hotels URBN Shanghai Address: 183 jiaozhou lu, shanghai china 200040. To: (URBN)YOGA 3624 Market St, Suite 5E, Philadelphia, PA 19104. To: Urbn Media group, 6200 Tarnef Drive, Houston, TX 77074. To: Muz Wear, Urbn Grmnts, 12058 Centralia St. Hawaiian Garden, CA 90630. Urbn Travel, PO Box 37650, Dubai, UAE Urbn Culture627 H St, Chula Vista, CA 91910, Manhattan College Urban Affairs (URBN)Dr. Cory Blad Director of the Program Manhattan College Manhattan College Parkway Riverdale, NY 10471, Drexel UniversityUniversity City Main Campus 3141 Chestnut Street, Philadelphia PA 19104. Urb’n Essense PO Box 77694 Washington, DC 20013 -8694

All written work, artwork, thoughts, ideas expressed herein on URBNANTHONY.com are the sole property of URBN, URBN Books, and URBNANTHONY.com and are subject to Copyright Laws and may not be reproduced without the expressed written consent of the Owner.

To: Maura Murphy-Osborne, Assistant Attorney General From: Anthony McKnight Sr. Re: 3:10cv1471(MRK) Date: July 14, 2011

Mrs Murphy-Osborne, I am requesting an opportunity to review the WC file 30008112 to verify some content. The Helen Kemp letters are relevant to the benefits her office gave to white people subsequent my application. This was included in the past correspondence. Also included in this memorandum is information that may be helpful to you. I took the liberty to ³bold´ or ³italic´ the material relating to the complaint. Reed v Reed«404 U.S. 71, 92 S.Ct. 251, 253 (1971): EP clause denies "to states the power to legislate that different treatment be accorded persons placed by a statute into different classes on the basis of criteria wholly unrelated to the objective of the statute. A classification µmust be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation." Whitworth v. Bynum, 699 S.W.2d 194, 197 (Tex. 1985): Texas guest statute violated EP. "Even when the purpose of a statute is legitimate, equal protection analysis still requires a determination that the classifications drawn by the statute are rationally related to the statute's purpose [cite omitted]. Under the rational basis test of Sullivan, similarly situated individuals must be treated equally under the statutory classification unless there is a rational basis for not doing so. Although Bynum has argued that an overinclusive statute cannot be struck down under a rational relationship test, overinclusiveness was a determinative factor in Sullivan."

{The similarly situated representation made by Linda Fowler in the Commissioner Miles Decision relates to Negroes. Notice: The first report of injury where all Negroes were similarly terminated from employment without the benefits accorded white injured corrections officers associated with 5-142(a). Notice also legal counsel representing the injured Negroes}
The Equal Protection Clause of the 14th amendment of the U.S. Constitution prohibits states from denying any person within its jurisdiction the equal protection of the laws. SeeU.S. Const. amend. XIV. In other words, the laws of a state must treat an individual in the same manner as others in similar conditions and circumstances {Cozzolino}. A violation would occur, for

example, if a state prohibited an individual from entering into an employment contract because he or she was a member of a particular race. The equal protection clause is not intended to provide "equality" among individuals or classes but only "equal application" of the laws. The result, therefore, of a law is not relevant so long as there is no discrimination in its application. By denying states the ability to discriminate, the equal protection clause of the Constitution is crucial to the protection of civil rights. SeeCivil Rights. Generally, the question of whether the equal protection clause has been violated arises when a

state grants a particular class of individuals the right to engage in an activity yet denies other individuals the same right. There is no clear rule for deciding when a
classification is unconstitutional. The Supreme Court has dictated the application of different tests depending on the type of classification and its effect on fundamental rights. Traditionally, the Court finds a state classification constitutional if it has "a rational basis" to a "legitimate state purpose." The Supreme Court, however, has applied more stringent analysis in certain cases. It will "strictly scrutinize" a distinction when it embodies a "suspect classification." In order for a classification to be subject to strict scrutiny, it must be shown that the state law or its administration is meant to discriminate. Usually, if a purpose to discriminate is found the classification will be strictly scrutinized if it is based on race, national origin, or, in some situations, non U.S. citizenship (the suspect classes).In order for a classification to

be found permissible under this test it must be proven, by the state, that there is a compelling interest to the law and that the classification is necessary to further that interest. The Court will also apply a strict scrutiny test if the classification
interferes with fundamental rights such as first amendment rights, the right to privacy, or the right to travel. The Supreme Court also requires states to show more than a rational basis (though it does not apply the strictly scrutiny test) for classifications based on gender or a child's status as illegitimate. The 14th amendment is not by its terms applicable to the federal government. Actions by the federal government, however, that classify individuals in a discriminatory manner will, under similar circumstances, violate the due process of the fifth amendment. SeeU.S. Const. amend. V.

{Please see plaintiffs oral argument WC Delaney May 5, 2010}
§ 1981. Equal rights under the law (a) Statement of equal rights. All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other. (b) ³Make and enforce contracts´ defined For purposes of this section, the term ³make and enforce contracts´ includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship. (c) Protection against impairment The rights protected by this section are protected against impairment by nongovernmental

discrimination and impairment under color of State law. . § 1443. Civil rights cases

Any of the following civil actions or criminal prosecutions, commenced in a State court may be removed by the defendant to the district court of the United States for the district and division embracing the place wherein it is pending: (1) Against any person who is denied or cannot enforce in the courts of such State a right under any law providing for the equal civil rights of citizens of the United States, or of all persons within the jurisdiction thereof; (2) For any act under color of authority derived from any law providing for equal rights, or for refusing to do any act on the ground that it would be inconsistent with such law.
We have said the prohibitions of the Fourteenth Amendment are addressed to the States. They are, 'No State shall make or enforce a law which shall abridge the privileges or

immunities of citizens of the United States, . . . nor deny to any person within its jurisdiction the equal protection of the laws.' They have reference to actions of the
political body denominated a State, by whatever instruments or in whatever [100 U.S. 339, 347] modes that action may be taken. A State acts by its legislative, its executive, or its judicial authorities. It can act in no other way. The constitutional provision, therefore, must mean that no agency of the State, or of the officers or agents by whom its powers are exerted, shall deny to any person within its jurisdiction the equal protection of the laws. Whoever, by virtue of

public position under a State government, deprives another of property, life, or liberty, without due process of law, or denies or takes away the equal protection of the laws, violates the constitutional inhibition; and as he acts in the name and for the State, and is clothed with the State's power, his act is that of the State. This must be so, or the constitutional prohibition has no meaning. Then the State has clothed one of its agents with power to annul or to evade it. {Third party administrator Insurance company, DAS etc.} When a
State clothes a private party with official authority, he may not engage in conduct forbidden the State

SECTION 1. RIGHTS GUARANTEED: EQUAL PROTECTION OF THE LAWS Scope and Application State Action .--''[T]he action inhibited by the first section of the Fourteenth Amendment is only such action as may fairly be said to be that of the States. That Amendment erects no shield against merely private conduct, however discriminatory or wrongful.'' 1 The Amendment by its express terms provides that ''[n]o State . . .'' and ''nor shall any State . . .'' engage in the proscribed conduct. ''It is State action of a particular character that is prohibited. Individual

invasion of individual rights is not the subject matter of the amendment. It has a deeper and broader scope. It nullifies and makes void all State legislation, and State action of every kind, which impairs the privileges and immunities of citizens of the United States, or which injures them in life, liberty, or property without due process of law, or which denies to any of them the equal protection of the laws.'' While the state action doctrine is equally applicable to denials of privileges or immunities, due process, and equal protection, it is actually only with the last great right of the Fourteenth Amendment that the doctrine is invariably associated. ''The vital requirement is State responsibility,'' Justice Frankfurter once wrote, ''that somewhere, somehow, to some extent, there be an infusion of conduct by officials, panoplied with State power, into any scheme'' to deny protected rights.Certainly, state legislation commanding a discriminatory result is state action condemned by the first section of the Fourteenth Amendment, and is void.But the difficulty for the Court has begun when the

conduct complained of is not so clearly the action of a State but is, perhaps, the action of a minor state official not authorized or perhaps forbidden by state law so to act, or is, perhaps on the other hand, the action of a private party who nonetheless has some relationship with governmental authority.
The continuum of state action ranges from obvious legislated denial of equal protection to private action that is no longer so significantly related to or brigaded with state action that the Amendment applies. The prohibitions of the Amendment ''have reference to actions of the political body denominated by a State, by whatever instruments or in whatever modes that action may be taken. A State acts by its legislative, its executive, or its judicial authorities. It can act in no other way. The constitutional provision, therefore, must mean that no

agency of the State, or of the officers or agents by whom its powers are exerted, shall deny to any person within its jurisdiction the equal protection of the laws. Whoever, by virtue of public position under a State government, deprives another of property, life, or liberty, without due process of law, or denies or takes away the equal protection of the laws, violates the constitutional inhibition; and as he acts in the name and for the State, and is clothed with the State's power, his act is that of the State.''
See, e.g., Ross v. Moffitt, 417 U. S. 600, 609 (1974) (³ µEqual Protection¶ « emphasizes disparity in treatment by a State between classes of individuals whose situations are arguably indistinguishable´);

Olech, 528 U. S., at 564 Jurisdictional and Immunity claims. The Fourteenth Amendment provides, in relevant part: ³Section 1. « No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.´ .....

³Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.´

A fiduciary duty is a legal or ethical relationship of confidence or trust regarding the management of money or property between two or more parties, most commonly a fiduciary and a principal. One party, for example a corporate trust company or the trust department of a bank, holds a fiduciary relation or acts in a fiduciary capacity to another, such as one whose funds are entrusted to it for investment. In a fiduciary relation one person, in a position of vulnerability, justifiably reposes confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires one to act at all times for the sole benefit and interests of another, with loyalty to those interests. A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. {5-142(a)benefits}

Toni Harp/Toni Walker Appropriations Committee
A fiduciary duty[1] is the highest standard of care at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.{Plaintiff did not retire} In Englishcommon law the fiduciary relation is arguably the most important concept within the portion of the legal system known as equity. When a fiduciary duty is imposed, equity requires a stricter standard of behavior than the comparable tortiousduty of care at common law. It is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where his fiduciary duty conflicts with another fiduciary duty, and a duty not to profit from his fiduciary position without express

knowledge and consent.
A fiduciary cannot have a conflict of interest. It has been said that fiduciaries must conduct themselves "at a level higher than that trodden by the crowd" and that "[t]he distinguishing or overriding duty of a fiduciary is the obligation of undivided loyalty."

The loyalty in 5-142(a) claims must be to the law and not the administration. Plaintiff¶s retirement contributions remain intact. Retirement is the point where a person stops employment completely.

The most common circumstance where a fiduciary duty will arise is between a trustee, whether real or juristic, and a beneficiary. The trustee to whom property is legally committed is the legal²i.e., common law²owner of all such property. The beneficiary, at law, has no legal title to the trust; however, the trustee is bound by equity to suppress his own interests and administer the property only for the benefit of the beneficiary. In this way, the beneficiary obtains the use of property without being its technical owner. In SEC v. Chenery Corporation 318 U.S. 80 (1943), Frankfurter J said, ³ To say that a man is a fiduciary only begins the analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And what are the consequences of his deviation from his duty?

Generally, the employment relationship is not regarded as fiduciary, but may be so if "within a particular contractual relationship there are specific contractual obligations which the employee has undertaken which have placed him in a situation where equity imposes these rigorous duties in addition to the contractual obligations Mis-Appropriations committed by Senators Harp and former senator Lawlor. Suzio «..³fraud´
Accountability A fiduciary will be liable to account if proven to have acquired a profit, benefit or gain from the relationship by one of three means: In circumstances of conflict of duty and interest In circumstances of conflict of duty to one person and duty to another person By taking advantage of the fiduciary position. Therefore, it is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where his fiduciary duty conflicts with another fiduciary duty, and not to profit from his fiduciary

position without express knowledge and consent. A fiduciary cannot have a conflict of interest.
Conflict of duties{Attorney General Office Represents both the State and

complaints against the state at the same issue at law}.
A fiduciary's duty must not conflict with another fiduciary duty.Stewart v Layton (1992) 111 ALR 687 Conflicts between one fiduciary duty and another fiduciary duty arise most often when a lawyer or an agent, such as a real estate agent, represent more than one client, and the interests of those clients conflict. This would occur when a lawyer attempts to represent both the plaintiff and the defendant in the same matter, for example. The rule comes from the logical conclusion that a fiduciary cannot make the principal's interests a top priority if he has two principals and their interests are diametrically opposed; he must balance the interests, which is not acceptable to equity. Therefore, the conflict of duty and duty rule is really an extension of the conflict of interest and duty rules. No-profit rule A fiduciary must not profit from the fiduciary position. This includes any benefits or profits which, although unrelated to the fiduciary position, came about because of an opportunity that the fiduciary position afforded. It is unnecessary that the principal would have been unable to make the profit; if the fiduciary makes a profit, by virtue of his role as fiduciary for the principal, then the fiduciary must report the profit to the principal. If the principal consents then the fiduciary may keep the benefit. If this requirement is not met then the property is deemed by the court to be held by the fiduciary on constructive trust for the principal. Secret commissions, or bribes, also come under the no profit rule. The bribe shall be held in constructive trust for the principal. The person who made the bribe cannot recover it, since he has committed a crime. Similarly, the fiduciary, who received the bribe, has committed a crime. Fiduciary duties are an aspect of equity and, in accordance with the equitable principles, or maxims, equity serves those with clean hands.

Breaches of duty and remedies Conduct by a fiduciary may be deemed constructive fraud when it is based on acts, omissions or concealments considered fraudulent and that gives one an advantage against the other because such conduct²though not actually fraudulent, dishonest or deceitful²demands redress for reasons of public policy.
Where a principal can establish both a fiduciary duty and a breach of that duty, through violation of the above rules, the court will find that the benefit gained by the fiduciary should be returned to the principal because it would be unconscionable to allow the fiduciary to retain the benefit by employing his strict common law legal rights. This will be the case, unless the fiduciary can

show there was full disclosure of the conflict of interest or profit and that the principal fully accepted and freely consented to the fiduciary's course of action.

Remedies will differ according to the type of damage or benefit. They are usually distinguished between proprietary remedies, dealing with property, and personal remedies, dealing with pecuniary (monetary) compensation what is meant by a constructive trust is that the court has created and imposed a duty on the fiduciary to hold the money in safekeeping until it can be rightfully transferred to the principal. Compensatory damages Compensatory damages are also available. Accounts of profits can be hard remedies to establish, therefore, a plaintiff will often seek compensation (damages) instead. Courts of equity initially had no power to award compensatory damages, which traditionally were a remedy at common law, but legislation and case law has changed the situation so compensatory damages may now be awarded for a purely equitable action.

Assistant Attorney General Murphy-Osborne, I have recently come across these highlighted materials. It may give you a better or clearer understanding as to what and why things transpired the way they did. As you may notice the very same individuals responsible for your appointment to this case are the very same individuals responsible for the appointment of individuals offices you are representing (DOC, DAS, etc.,). Unfortunately, their agenda is to discriminate and violate the rights of others to promote their political and religious interests. As you may notice the reference to SB 1098 would have giving Mr. Lawlor and McDonald control over the appointments of members to the organization, subsequently allowing for gay unions in the church ordained by the “Catholic” church. This, in conjunction with the same sex bills. In the second highlighted materials, you may better understand the conflict of interest and the inability of the state to properly investigate my claims of fraud and discrimination extending back to McKnight v. State of Connecticut (1995). As noted in the Senate Debate between Senators Suzio and Harp during their budget debate June 1, 2011-at hour five, thru hour five and thirty minutes : “no committee determined that there was any fraud.” As member of the Judiciary committee and responsible for oversight of the Workers Compensation Commission which was used to ‘re’ and misappropriate funds. This was done through subversion. As I reported and filed these violations in 1995(Also the state ethics and judiciary administration), this judiciary committee along with members of State’s Attorney John Bailey created a task force in 1995 to discredit me, harassed and threatened the lives of my children, and hence, the “Nigger” statement from members of the Attorney Generals Office after failed settlement meetings. The committee responsible for this determination were the very same Judiciary committee co-chairs, Michael Lawlor and later Andrew McDonald, that were committing the fraud and discrimination. {You can get a better understanding from the Workers Comp. File 300008112}.

[In March 2009 McDonald and Judiciary committee co-chair Mike
Lawlor proposed a bill (sb 1098) to regulate the management of Roman Catholic parishes in Connecticut. The bill, by allowing parishioners to create a lay board to govern a parish, in which board all control over fiscal and administrative matters would be vested, effectively removes the Parish Priest and Bishop from their traditional positions of power. The bill is specific to the Catholic Church and, as such, is viewed some as antiCatholic and retaliation for Catholic opposition to same-sex marriage legislation. The public hearing on this bill was cancelled when, according to Capital Police, 1,000 supporters entered the Capital to protest. Another 4,200 were present outside the building. [2] Opponents charged the bill would violate the ’separation of church and state” clause in the First Amendment, It would also violate the "Supremacy clause," and the Fourteenth Amendment barring discriminatory legislation. ] “McDonald is gay. His campaigns have won the backing of the Gay & Lesbian Victory Fund.”

Attorney General, McDonald, Lawlor Ask State Supreme Court To Overturn Decision Protecting Chief Justice From Testifying September 5, 2006 Attorney General Richard Blumenthal, State Sen. Andrew McDonald, D-Stamford, and State Rep. Michael Lawlor, D-East Haven, today asked the State Supreme Court to immediately overturn the trial court's decision protecting Chief Justice William J. Sullivan from being forced to testify before the legislature's judiciary committee. In the legal papers, Blumenthal - representing McDonald and Lawlor - he said Sullivan's delay in releasing a decision of the Supreme Court for the sole purpose of aiding the appointment of the court's next chief justice intruded into the legislature's constitutional power to appoint the chief justice. A legislative investigation of the alleged intrusion is vital to ensure that future appointments are not subject to similar subversion, Blumenthal, McDonald and Lawlor said.

I have sent the Legal Department within the Department of Social Services a fax copy of the same material I forwarded to you yesterday. Can you please along with Mr. McDonald of the Governor’s Office inform these people at Social Services of your involvement in handling this matter(s). If you are not trying to resolve this matter legitimately, then this must be another extension of the fraud being committed against me the past 18 plus years. I have included the most recent correspondence from the State of Connecticut regarding my “Food Stamp” determination. Please note: I do not want to sign anything other than my retirement and settlement papers. I am not interested in attending any hearing to sign over future payments for food stamp benefits or whatever the document sent from social services means. Food Stamps are an entitlement and if I am entitled to them I want them, if I am not, then I do not. Please be aware that the “State” was able to transfer funds from a University of New Haven paycheck for child support. Therefore, it only reasons that the State can very well perform the administrative task of calculating and deducting, and adjusting my benefits due under the various laws mentioned in the instant federal complaint. I sincerely do hope that you read Chancellor Williams: “The Destruction of the Black Civilization”, and Niccolo Machiavelli{all of them}. Democracy fails to Anarchy, as people like Lawlor, McDonald, Harp, Walker, and others purposely mis-govern. Their tyranny against the people comes through the subversion and perversion of the laws. Remember, only those that honor the laws are honorable people. That means the remainder are uncivil, tyrants, savages, infidels. So, it appears there must be a continuance of the wrestling against this evil and wickedness in the principalities and high places. I only pray and give testimony in prayer to God that the State of Connecticut government and it’s people are corrupted and not only defile the law of nature, and the laws as handed down through Moses, but most horribly they do not honor their own law. I only await the decision of the Federal Government represented by the United States District Court.

Administration of Barack H. Obama, 2009 Proclamation 8366—National Equal Pay Day, 2009 April 28, 2009
By the President of the United States of America A Proclamation Harriet Beecher Stowe helped galvanize the abolitionist movement with her groundbreaking literature. Frances Perkins advised President Franklin Delano Roosevelt and led the Department of Labor during one of its most challenging periods in history. Barbara McClintock helped unlock the mysteries of genetics and earned a Nobel Prize. These and countless other women have broken barriers and changed the course of our history, allowing women and men who followed them the opportunity to reach greater heights. Despite these achievements, 46 years since the passage of the Equal Pay Act and 233 years since our Nation was established with the principle of equal justice under law, women across America continue to experience discrimination in the form of pay inequity every day. Women in the United States earn only 78 cents for every dollar a man earns, and today marks the inauspicious occasion when a woman's earnings finally catch up with a man's from the previous year. On National Equal Pay Day, we underscore the importance of this issue to all Americans. If we wish to honor our Nation's highest ideals, we must end wage discrimination. The Founders established a timeless framework of rights for the American people. Generation after generation has worked and sacrificed so that this framework might be applied equally to all Americans. To honor these Americans and stay true to our founding ideals, we must carry forward this tradition and breathe life into these principles by supporting equal pay for men and women. Wage discrimination has a tangible and negative impact on women and families. When women receive less than their deserved compensation, they take home less for themselves and their loved ones. Utilities and groceries are more difficult to afford. Mortgages and rent bills are harder to pay. Children's higher education is less financially feasible. In later years of life, the retirement that many women have worked so hard for—and have earned—is not possible. This problem is particularly dire for women who are single and the sole supporters of their families. Women should not and need not endure these consequences. My Administration is working to advance pay equity in the United States. The first bill I signed into law as President, the Lilly Ledbetter Fair Pay Act of 2009, allows more women to challenge pay discrimination by extending the timeline within which complaints can be filed. This law advances the struggle for equal pay, but it is only an initial step. To continue this progress, I issued an Executive Order establishing the White House Council on Women and Girls. This high-level body, composed of Cabinet members and heads of sub-Cabinet agencies, is charged with advancing the rights and needs of women, including equal pay. Still, Government can only advance this issue so far. The collective action of businesses, community organizations, and individuals is necessary to ensure that every woman receives just treatment and compensation. We Americans must come together to ensure equal pay for both women and men by reminding ourselves of the basic principles that underlie our Nation's

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strength and unity, understanding the unnecessary sacrifices that pay inequity causes, and recalling the countless women leaders who have proven what women can achieve. Now, Therefore, I, Barack Obama, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim April 28, 2009, as National Equal Pay Day. I call upon American men and women, and all employers, to acknowledge the injustice of wage discrimination and to commit themselves to equal pay for equal work. In Witness Whereof, I have hereunto set my hand this twenty-eighth day of April, in the year of our Lord two thousand nine, and of the Independence of the United States of America the two hundred and thirty-third.

BARACK OBAMA
[Filed with the Office of the Federal Register, 11:15 a.m., April 30, 2009] NOTE: This proclamation was published in the Federal Register on May 1. Categories: Proclamations : National Equal Pay Day. Subjects: Equal Pay Day, National. DCPD Number: DCPD200900300.

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REVISED SEBAC 2011 AGREEMENT -betweenSTATE OF CONNECTICUT -andSTATE EMPLOYEES BARGAINING AGENT COALITION (SEBAC) In order to assist in resolving the financial issues currently facing the State of Connecticut while preserving public services, the State of Connecticut and the State Employees Bargaining Agent Coalition agree to the following provisions. This agreement shall amend and supersede the previous SEBAC 2011 Agreement.. I. SAVINGS AND TRANSFORMATION

The parties have explored and will continue to explore and, where appropriate, implement strategies to: a. Harness the creativity and experience of front-line bargaining and non-bargaining unit state employees to improve the efficiency and effectiveness of state government; b. Streamline and flatten organizational structures to concentrate on service delivery; c. Examine and redress barriers to the most efficient use of in-house resources to address agency and cross-agency needs; d. Discourage the use of outside contractors and consultants when internal capacity exists or can reasonably be developed; and e. Make best efforts to ensure that vendors and service providers doing business with the state do so at reasonable rates of return and under terms that reflects the shared sacrifice being asked from all sectors of Connecticut society. As part of this process, the following steps will be taken: Establish a Joint Labor Management Information Technology Committee as soon as possible that will consider, among other things, utilizing new technologies and reducing licensing procurement and consulting costs. This Committee shall be headed by the Chief Information Officer of the State. b. Establish a Joint Labor Management Committee, no later than September 1, 2011, which will begin to explore the issues, outlined in subparagraphs (a) - (d) above, except issues that impact on matters of collective bargaining. c. The Governor will issue an Executive Order or similar appropriate directive to state agencies that will implement subparagraph (e) above, no later than June 1, 2011. a.

H.

MODIFICATIONS TO THE CURRENT SEBAC PENSION AND HEALTH CARE AGREEMENT

Reaffirmation of the Independence of the Plans. The parties reaffirm that the State Employee Pension and Health Care plans are set forth in contract, and are intended to and shall remain independent of any other pension or health care plans that may or may not be created by state government. Neither the legislature nor the governor shall have the ability to include the state employees' health care plan in Sustinet or any other program. A. Health Care Preservation and Enhancement of Current Plans and Joint Efforts. Except as specifically referenced herein, all the provisions of 1997-2017 Pension and Health Care Agreement, as amended, shall apply. None of the benefit levels, access requirements, including doctors and hospitals or basic plan structures are modified by this agreement. Any impact on current retirees shall be based on their voluntary participation except as specifically provided herein. There shall be no increase in costs affecting current retirees as a result of this agreement. Changes affecting future retirees shall be effective October 2, 2011. There is no change in current plans except as specifically noted otherwise below. There shall be no additional costs to employees from choosing the health enhancement program, but there will be increased premium shares and a deductible for those who decline to enroll in, or fail to comply with (after appropriate notice), the health enhancement program. As is currently the case under the State Health Plan, any medical decisions will continue to be made by the patient and his or her physician. 1. The parties shall: a. Institute a $35.00 Emergency Room Copayment when there is a reasonable medical alternative and the individual is not admitted to the hospital; b. Require both medical vendors (currently Anthem and Oxford/United) to implement existing plan rules consistently. c. Maximize the opportunity for members to choose to use patient-centered medical homes; d. Provide appropriate medical follow-up to minimize hospital readmissions postsurgery and/or other initial hospital stay; e. Provide for purely voluntary participation in Obesity reduction and Tobacco cessation programs; f. Make the current pharmacy mail in program for maintenance medications: i. Mandatory after the first prescription for a new medication for active employees and current retirees under the age of 65, and after October 2, 2011 for new retirees. Each copayment for active employees and new retirees after October 2, 2011 is one for each ninety (90) day supply.

Voluntary for current retirees age 65 or over. Once such individuals opt in at any open enrollment, continuing participation is mandatory. There shall be no copayments for current retirees who begin participating in the Pharmacy Mail in program; Participants may at their option choose to receive their mandatory mail order at any local pharmacy that wishes to participate in the maintenance drug network. g. Implement the following Pharmacy copayments for actives and new retirees after October 2, 2011: $5/10/25 (generic/preferred brand/other brand) for maintenance drugs (except for the lower copayment for listed diseases under the health enhancement plan set forth in 2c) and $5/20/35 for non-maintenance drugs. 2. Health Enhancement Program This voluntary enhancement program shall be made available to all state employees and retirees (including all enrolled dependents) during each open enrollment as part of all of the Point of Enrollment and Point of Service plans currently available. All benefits and requirements will be the same as currently available to state employees, retirees (including all enrolled dependents) except as specifically written below. It shall include a written commitment (Attachment Bl) to the requirements of the program in order to be admitted and remain admitted to the program, including agreed upon health assessments and screenings designed to provide early diagnosis and appropriate information to patients so that they and their doctors can choose the best treatment of any illness; This program is designed to enhance the ability of patients with their doctors to make the most informed decisions about staying healthy, and, if ill, to treat their illness. As is currently the case under the State Health Plan, any medical decisions will continue to be made by the patient and his or her physician. See Attachment B 3 a. Cost: There shall be no additional costs to employees for choosing the Health Enhancement Program. The premium share for employees and retirees shall be as determined by the existing Pension and Health Care Agreement. b. Copayments shall be waived (Diabetes) or reduced ($0/5/12.50) for drugs prescribed for the following chronic conditions: i. Diabetes, both Type 1 and 2 ii. Asthma and COPD iii. Heart failure/heart disease iv. Hyperlipidemia v. Hypertension c. Office visit copayments shall be waived for treatment and monitoring of the conditions in subparagraph 2b above;
in.

d. Participants in the Health Enhancement program will be expected to participate in the disease counseling and education programs outlined in Attachment B 3. e. Participants will also be expected to adhere to the medically approved schedule for screenings and wellness visits with waiver or rebate of copayments for such services as set forth in Attachment B2. f. Participants who are covered by the plans dental program shall be required to get two free dental cleaning per year. g. Participants who choose not to adhere to the requirements of the Health Enhancement program will be given appropriate notice and opportunity to improve. The financial incentives for participation in the health enhancement program shall be removed from members who themselves or whose covered dependents fail to comply with the requirements of the program. They may return to the Health Enhancement Program only upon coming into compliance and no sooner than the first day of the month following their demonstration of compliance. Removal from the program shall not, in any case, be based upon the decision of any patient as to the treatment they receive, or on the progress or lack of progress in the treatment of their illness. It shall not be based on any other factor whatsoever except for the refusal of the patient to get required tests and screening, and if applicable, to participate in one of the five (5) listed disease counseling and education programs. Any removal shall be only upon prior notice to and the review by the Health Care Cost Containment Committee. The HCCCC will resolve all disputes about compliance. The parties recognize that the implementation of the Health Enhancement Program will raise legitimate and unanticipated issues of compliance such as the inability to schedule wellness physical examinations and screenings within a specific time frame. The parties therefore agree that disputes will be decided on a standard of fairness and the opportunity available to the member or his or her enrolled dependents to substantially comply with the requirements of enrollment in the Health Enhancement Program. h. No member otherwise in compliance with the Health Enhancement Program shall be charged additional premium or otherwise disadvantaged because he or she - despite making best reasonable efforts - is unable to achieve the compliance of a covered dependent not in that member's legal custody pursuant to a divorce decree or legal separation agreement. i. No insurance vendor shall receive any financial incentive or benefit from the admission of any member to, or the removal of any member from the health enhancement program. The program shall be designed to encourage and reward participation of members in the program and not to remove the financial incentive from any member except one who chooses after appropriate notice and opportunity to correct, not to comply with the specific written requirements of the program.

Patients in one of the listed disease education and counseling programs shall receive a $100 cash payment if the member and all dependents comply in a given year with their commitment to the health Enhancement Program. Pay is the same for each class of coverage, i.e., same for individual, one plus one, family or FLES. 3. Impact for Employees and Future Retirees Declining the Health Enhancement Program Employees, and future retirees after October 1,2011, who decline participation in the Health Enhancement Program or who are removed from participation pursuant to 2g, would pay an additional $100 per month in premium share. This additional cost shall be the same for individual, one plus one, families, and "FLES" coverage. There will also be a $350 per person annual deductible, maximum $1400 for families, for services not otherwise covered by copayments. No family shall be disadvantaged for the purposes of this maximum by the use of FLES status. 4. Dental Plan The present dental plans shall continue to be offered to state employees. The premium share for employees and retirees shall be as determined by the existing Pension and Health Care Agreement. There shall be no limit on periodontal care for members who are in the Health Enhancement Program. B. Retiree Health Care 1. Premium Structure for New Retirees (retiring after October 1, 2011) - Current premium structure of retiree health care remains unchanged for those choosing the health enhancement program. Declining by the retiree, or failing after appropriate notice to comply with the health enhancement program by either the retiree or their covered dependents, will result in a premium share increase of $100 per month. 2. Health care premiums for Early Retirees - The parties have agreed to a grid, Attachment C, where health care costs (for health care eligible individuals) are imposed on individuals who elect early retirement until they reach their normal retirement date, or age 65, whichever is earlier. The grid will also be applied to individuals who are eligible for a deferred vested benefit (for health care eligible individuals) that elect to receive their benefit before age 65 until they reach age 65 or their normal retirement age, whichever is earlier. No early retirement health care premium will be charged for any employee who has 25 years of service as of July 1, 2011 who retires before July 1 2013. 3. Employee Contribution to Retiree Health Care Trust Fund (OPEB) - Employees currently paying the three percent (3%) contribution into the Retiree Health Care Trust Fund will continue to pay such amount. All such employees shall pay the three percent (3%) contribution for a period often (10) years or retirement, whichever is sooner. All individuals hired on or after July 1, 2011 shall pay the three percent (3%) for a period of ten (10) years or retirement, whichever is sooner, even if they had periods of prior state service. Individuals who are not paying the three percent (3%) contribution on June 30, 2013, shall begin paying a contribution. For these individuals, the contribution shall be

j.

phased in paying 1/2% effective the first day of pay period after July 1, 2013; increased to 2.0% effective the first day of pay period after July 1, 2014 and increased to 3.0% effective the first day of pay period after July 1, 2015. The contribution would continue for ten (10) years for all employees or until retirement, whichever is sooner. Effective July 1, 2017, the State will begin to contribute into the Retiree Health Care Trust Fund in an amount equal to amount contributed by employees in each year. The trust fund shall not be used to pay the retiree health care costs of any employee already retired prior to the effective date of this agreement. The obligation to use the funds solely to pay the retiree healthcare costs of individuals contributing to the funds (or to return the funds to individuals contributing but not qualifying for retiree health care) shall be permanent and irrevocable, notwithstanding the expiration date of this agreement. The Trust Fund shall be administered by the State Treasurer.

4. The following shall replace the provision entitled "Retiree Insurance for Employees hired after July 1,1997" in SEBAC V as amended by the provisions of the 2009 SEBAC Agreement. Retiree Health Insurance: Employees with 10 or more years of actual state service as of July 1, 2009 shall be entitled to retiree health care under the practice in effect under the terms the Pension and Health Care Agreement, as amended, but prior to the changes effected by SEBAC 2009 and this agreement. Employees with fewer than ten years of actual state service as of July 1, 2009, shall be subject to the requirements of SEBAC 2009, including the rule of 75 for deferred vested retirees, and shall also require 15 years of actual state service, except that no current employee who would have otherwise been eligible for retiree healthcare under the provisions of SEBAC 2009 shall be denied eligibility for retiree healthcare due to the 15 year requirement. All other employees shall be required to meet the rule of 75 and to have 15 years of actual state service unless they transition directly from employment to normal or early retirement. Such employees who transition directly to normal or early retirement shall not be required to meet the Rule of 75 but shall be required to have 15 years of actual state service. An employee who is eligible for and begins receiving a Disability Retirement Benefit shall be entitled to health insurance as a retired state employee regardless of his/her number of actual state service. Nothing herein restricts the ability of an employee to begin receiving his/her retirement or deferred vested pension at an earlier time in accordance with plan provisions. An employee who terminates state service and does not immediately begin to receive his/her pension shall be entitled to the same health insurance benefits as active employees receive at the time he/she begins to receive pension payments. Provided, however, laid off employees and employees who leave state service because there is not a fair assurance of continued employment shall be entitled to retiree health insurance at such time they are entitled to and begin receiving an Early or Normal Retirement Benefit under the plan. Nothing herein shall change the method of calculation of service for part time faculty of the constituent units of higher education.

C. SERS Pension 1. Salary Cap - The maximum salary that can be considered as part of an individual's pension benefit is the amount outlined in Section 415 of the Internal Revenue Code. 2. COLA - The minimum COLA shall be two percent (2.0%) and the maximum COLA shall be seven and one-half percent (7.5%) for those individuals retiring on or after October 2, 2011. 3. Early Retirement Reduction Factors - For individuals retiring on or after October 2, 2011, the early retirement reduction factor shall be changed to six percent (6%) for

each year before the individual would be eligible to take unreduced Normal Retirement. 4. Current employees who retire after July 1,2022 - The following changes do not apply to individuals who retire under the Hazardous duty provisions of the plan. Normal Retirement eligibility increases from Age 60 and 25 Years of Benefit Service or Age 62 and 10 Years of Benefit Service to Age 63 and 25 Years of Benefit Service or Age 65 and 10 Years of Benefit Service. This change affects all years of benefit service earned on or after July 1, 2011. By July 1, 2013, current employees may make a one-time irrevocable election to begin paying the actuarial pension cost of maintaining the normal retirement eligibility that exists in the present plan which is scheduled to change effective July 1, 2022. The cost shall be established by the Plan's actuaries and shall be communicated to employees by the Retirement Division. Such election shall be made on a form acceptable to the Retirement Commission and shall indicate the employee's election to participate or not to participate. In the event the employee fails to make an election, he/she shall not be eligible to participate. In the event the employee makes a successful claim to the Retirement Commission of agency error, the employee shall make payments in accordance with usual practice. 5. Tier II, IfA and Tier III Breakpoint - The parties will meet and discuss a modification to the Breakpoint that will be effective for service earned on and after July 1, 2013. The revised breakpoint will be designed so that the pension amount for individuals earning under the current breakpoint will be increased. The cost of such change in Breakpoint shall not increase the Employer Normal Cost more than .5% of payroll in any year. The formula change and costs shall be provided by the Plan's Actuaries. In the event the parties are unable to agree on the revised Breakpoint, the matter shall be referred to the arbitrator appointed under the terms of the Pension Agreement and governed by the provisions of CGS sec. 5-278a and the terms of this agreement. 6. Tier III - A new retirement tier shall be established, known as Tier III, for individuals hired on or after July 1, 2011. The plan shall be the same as Tier IIA, including the employee contribution, with Normal Retirement eligibility Age of 63 and 25 years of benefit service or Age 65 and 10 years of benefit service. Early Retirement eligibility shall be Age 58 and 10 years of benefit service and Hazardous Duty Retirement eligibility shall be the earlier of age 50 and 20 years of benefit service or 25 years of benefit service, regardless of age. In order to qualify for a Deferred Vested Benefit, the individual must have 10 or more years of benefit service. In all cases, the benefit shall be calculated on the individual's highest five year average salary. 7. Hybrid Defined Benefit/Defined Contribution Plan for Employees in Higher Education- Individuals hired on or after July 1, 2011 otherwise eligible for the Alternate Retirement Plan (hereinafter referred to as "ARP") shall be eligible to be members of the new Hybrid Plan in addition to their existing choices. Individuals who are currently members of the ARP shall be eligible to join the Hybrid Plan on a one time option at the full actuarial cost. The Hybrid plan shall have defined benefits identical to Tier II/IIA and Tier III for individuals hired on or after July 1, 2011, but shall require employee contributions three percent (3%) higher than the

contribution required from the Applicable Tier II/IIA/III Plan. An employee shall have the option, upon leaving state service, of accepting the defined benefit amount, or electing to receive a return of his/her contributions to the Hybrid Plan, plus a five percent (5%) employer match, plus four percent (4%) interest (hereinafter referred to as the "cash out option" . In the event the employee elects the cash out option, he/she shall permanently waive any entitlement they may have to health insurance as a retired state employee unless they convert the cash out option to a periodic payment as would be required under the current ARP plan. 8. Continuation of Overtime Presumptions and Implementation of Additional Covered Earnings Rules The parties' understanding that all overtime in certain units is mandatory for purposes of Sections 5-162(b), 5-192(f)(c), and 5-192(z)(c) of the general statutes shall continue. Effective July 1, 2014, the language of those sections shall be changed to that reflected in attachment D. D Monitoring of funding status of the Pension and Retiree Healthcare Plans. The Health " Care Cost Containment Committee and the Pension Commission shall on a quarterly basis report to the parties on the progress of achieving full funding with respect to the Retiree Healthcare, and the Pension Plans, respectively. No additional cost shall accrue to either party or the fund as a result of such monitoring.

III.

SCOPE (OJE) and FIVE-YEAR AUDIT DATES

The parties have agreed that the current practice for five (5) year reviews will continue and CUE adjustments may be resolved for jobs which the Union believes have substantial changes in duties through interim bargaining and, if necessary arb-tratiorr (rather than through the Master Evaluation Committee). This will be applied to all OLR OJE-covered units. New positions will be subject to bargaining and arbitration one year after their creation and an individual being in the position, whichever .s later The implementation date for results of any five (5) year audit or arbitration shall be deferred to no earlier than July 1, 2013. There shall be no retroactivity prior to July 1, 2013 and no new costs created by bargaining or arbitration shall take effect prior to July 1, 2013. This provision shall not prevent the implementation of OJE adjustments agreed to or ordered prior to the effective date of this agreement. IV. A JOB SECURITY . Job Security for Office of Labor Relations -Covered Units. The following job security provisions shall apply to all OLR Covered units which agree or have agreed to contracts or modified contracts in accordance with the 2011 Agreement Framework including the provisions for wages and other changes which are summarized in Attachment A. 1 From the July 1, 2011 and through June 30, 2015, there shall be no loss of employment for any bargaining unit employee hired prior to July 1, 2011,

including loss of employment due to programmatic changes, subject to the following conditions: a. Protection from loss of employment is for permanent employees and does not apply to: ' i. employees in the initial working test period; ii. those who leave at the natural expiration of a fixed appointment term, including expiration of any'employment : with an end date; iii. expiration of a temporary, durational or special appointment; iv. non-renewal of a non-tenured employee (except in units where non-tenured have permanent status prior to achieving tenure); v. termination of grant or other outside funding specified for a particular position; ' vi. part-time employees who are not eligible for health insurance benefits. ! b. This protection from loss of employment does not prevent the State from restructuring and/or eliminating positions provided those affected bump or transfer to another comparable job In accordance with the terms of the attached implementation agreement. An employee who is laid off under the rules of the implementation provisions below because of the refusal of an offered position will not be considered a layoff for purposes of this Agreement. c. The State is not precluded from noticing layoff in order to accomplish any of the above, or for layoffs outside the July 1, 2011-June 30, 2015 time period. 2. The Office of Policy and Management and the Office of Labor Relations commit to continuing the effectiveness of the Placement & Training Process during and beyond the biennium to facilitate the carrying out of its purposes. 3. The State shall continue to utilize the funds previously established for carrying out the State's commitments under this agreement and to facilitate the Placement and Training process.
B. Implementation Provisions for SEBAC 2011 Job Security for OLR Covered Units.

The process outlined in this section is a supplement to the October 18, 2005 Placement and Training Agreement and is designed to govern the procedure utilized in situations where there are employees covered by the Placement and Training Agreement who are impacted by a decision to close a state facility or make other programmatic changes which would have resulted in the layoff of state employees but for the Job Security Provisions of SEBAC 2011, and transfers necessary to deal with workload issues necessitating the transfer of state employees to different work units, locations or facilities. The provisions hereunder shall expire as of June 30, 2015, unless extended by mutual agreement of the parties. The State will continue to provide the longest possible

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advance notice as provided in Section 7d of the Placement and Training Agreement to the unions and employees impacted by such decisions. The process described below shall be known as the Job Security Implementation ("JSI") Process. 1. There shall be a three-phase process as follows: a. Phase I. The State shall use its best efforts to attempt to combine the placement and transfers of individuals in the event of multiple closings and programmatic changes occurring within a the same period of time to maximize the likelihood of success. i. Initially affected employees would enter the Placement and Training (P&T) process. ii. May use normal P&T rights, iii. In addition, the Secretary of OPM shall use best efforts to make comparable jobs available within acceptable geographic radius (defined below). Such jobs will typically be in the affected employees' bargaining unit, iv. Comparable jobs within the same bargaining unit shall be initially offered to affected employees on the basis of layoff seniority as defined in their collective bargaining agreement and, if necessary, state service, v. Any affected employee not accepting a comparable job then goes to Phase II. b. Phase II. The collective bargaining agreement (CBA) process begins. Initially affected employees and/or secondarily affected employees may then exercise their rights under the CBA. The CBA process ends when either (1) the affected employee(s) has a comparable job; or (2) the affected employee(s) choose to waive further contractual displacement rights and enter Phase III. c. Phase III. Finally any remaining affected employee(s) would enter the P&T process. i. May use normal P&T rights. ii. In addition, the Secretary of OPM uses best efforts to make comparable jobs available within acceptable geographic radius (defined below). Such job will typically be in the affected employees' bargaining unit. iii. Comparable jobs within the same bargaining unit shall be initially offered to affected employees on the basis of layoff seniority as defined in their collective bargaining agreement and, if necessary, state service. iv. If no comparable job available within the acceptable geographic radius, the finally affected employee(s) will be offered other jobs within the acceptable geographic radius on a temporary basis until comparable job available, and are red-circled in original pay-grade.

11

2.

v. Employee may be offered training through the P&T Committee as a way of moving employee to a position comparable to the one lost. vi. No employee shall have a right to a promotion under this process. vii. Affected employee refusing an assignment within the acceptable geographic radius during Phase 3 of the process may be laid off, but will have ail usual rights of laid off employees. Relevant definitions which apply to this process only and shall not be utilized for any other purpose: a. "Comparable job" means one with similar duties and the same or substantially similar biweekly salary range. The requirement to offer a comparable job shall not be met if the target job requires a hazardous duty retirement covered employee to move to non-hazardous duty retirement employment, or vice versa. b. "Acceptable geographic radius" for Phase I means a one way commute equal to the greater of his/her present commute or thirty (30) miles from his/her work location at the time of notice. During Phase III, acceptable geographic radius means a one-way commute equal to the greater of his/her present commute or thirty (30) miles from his/her home. In the event that there is no opportunity within the applicable thirty (30) mile measurement, the State will provide an opportunity within a fifty (50) mile radius based upon the applicable measurement. In the event an opportunity becomes available prior to July 1, 2017 within the applicable thirty (30) mile limitation, the impacted individual shall be offered such position before it is offered to an individual with lesser rights. In the event the individual declines such position within the applicable thirty (30) mile measurement, the State has no further obligation to offer another position to such individual based upon the geographic restriction. c. Manner of measurement. The parties have agreed to utilize MapQuest, shortest distance for positions offered in Phase I and MapQuest, shortest time for positions offered in Phase III. Priority, Working Test Period Issues, and Related Issues a. Employees needing positions through the process outlined in this Section B (as compared to the normal P&T process) have priority over other claimants to position based on the SEBAC 2011 job security provisions. Provided, however, seniority under the CBA may be utilized for the purpose of shift selection in the target facility. b. Where a job is offered to comply with the rules of this Section which would require the completion of a working test period, failure of the employee to successfully complete that working test period will return the employee to the process outlined in this Section B, unless the reasons for the failure would constitute just cause for dismissal from state service. The process outlined in this Section B terminates as of June 30, 2015, or when there is no employee remaining with rights to the process, whichever is later. Dispute Resolution 12

3.

4.

5.

a. "Work now, grieve later" applies as usual to JSI related grievances. b. Placement &Training Committee to convene for emergency advisory procedure if employee claims he or she is being inappropriately laid off in violation of the JSI procedure. c. Any arbitration necessary to resolve a claim that an employee is being denied a suitable comparable assignment under this agreement shall receive priority processing for purposes of assignment of an arbitrator, a hearing date, and resolution of the arbitration. Any dispute or arbitration under this agreement shall be under the SEBAC agreement process. Transfer Implications a. Where staffing disproportions other than through agency consolidations, the process outlined in this Section B will be used to eliminate the necessity of a transfer (directly or through layoff notice). If there is more than one employee in the impacted classification, the State shall ask the employees in layoff seniority order and, in the event there are no volunteers, the junior employee shall be transferred. b. In cases where involuntary transfers occur, affected employees shall have the right of first refusal to return to their prior geographic locations prior to an equivalent position being offered at the prior geographic location to a less senior person. Job Security for Units Not Covered by OLR. Job security for other units has been or shall be negotiated on a unit-by-unit basis consistent with the 2011 Agreement Framework, including the provisions for wages and other matters which are summarized in Attachment A.

C.

V.

ADDITIONAL CONTRIBUTIONS BY THE STATE TOWARDS UNFUNDED LIABILITY IN PENSION AND/OR RETIREE HEALTH CARE

The Governor has authorized the Chief Negotiator for the State to communicate the Governor's commitment to appropriate consideration of additional state contributions towards long-term unfunded liabilities of the state, including pension and retiree health care, in years where there exists a state surplus.. VI. TENTATIVE AGREEMENT, SUBJECT TO RATIFICATION AND APPROVAL BY THE GENERAL ASSEMBLY

By their signatures below, the parties indicate that this tentative agreement has been approved by the Governor, and preliminarily recommended by SEBAC Leadership for ratification by the membership, subject to the employer(s) offering appropriate unit agreements to the bargaining units. SEBAC's final approval is subject to a post-membership vote by SEBAC Leadership in accordance with SEBAC rules. This agreement is further subject to the approval of the General Assembly in accordance with the provisions of Connecticut General Statutes §5-278(b). 13

VII.

DURATION.

The provisions of the current SEBAC Agreement shall be extended until June 30, 2022.

&s—S

Daniel E. Livingston, Chief Negotiator SEBAC

Mar^E. Ojakian, Chi^T Negotiator State of Connectici

t h i s ^ day DatedI this**/ d a of July, 2011.

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ATTACHMENT A State of Connecticut and SEBAC- Recommended Agreement on Savings, Transformational and Financial Issues and Framework for Job Security (hereinafter referred to as the "2011 Agreement Framework") concerning Wages and Other matters The State and SEBAC recognize that wages and other matters are negotiated on a bargaining unit basis by the union designated as the exclusive bargaining representative for that unit. However, the State and SEBAC have agreed that the following parameters shall apply to all units seeking the job security protections of the SEBAC 2011 Agreement. A. The following parameters shall apply to wage agreements through June 30, 2016: 1. Wage increases for FY 2011-12 and FY 2012-13 - Except as provided below, no state employee who is represented by a bargaining unit that is part of SEBAC will receive any increase in salary or payments for either of the next two fiscal years deriving from a General Wage, step increase, annual increment, payment for individuals who were at their top step as a bonus, a merit increase or any similar payment for the FY 2011-12 and FY 2012-13. As this agreement was not ratified prior to the time FY 2011-12 payments may have been made to some employees, effective the first day of the pay period following ratification of this agreement any payment referred to above for FY 2011-12 shall cease and the employees' salary shall be the same as it was prior to such increase. In the event any lump sum payment was made to any such employee, the value of the lump sum payment shall be divided by twenty-three (23) and the resultant amount shall be deducted from the employee's pay in equal amounts over the next twenty-three (23) pay periods. Individuals entitled to a promotion in accordance with the rules governing these subjects as outlined in the Connecticut General Statutes or their collective bargaining agreement shall receive increase in wages due to such promotion in accordance with past practice. Members of the P3A bargaining unit shall be entitled to share in the contractually created Merit Pool fund in the amount and manner provided in the contract and past practice. 2. Wage increases for FY 2013-14, FY 2014-15 and FY 2015-16 - Provide a Three percent (3%) increase plus step increases, annual increments or their equivalent in those units that have them as part of their collective bargaining agreement. Non-increment units will receive additional payments in accordance with the parties' usual practice. Correctional Supervisors (NP-8) shall receive an increase of three and one-half percent (3-1/2%) for the FY 2013-14 as they had previously negotiated that amount in their existing collective bargaining agreement. Provided, however, the wage increases for FY 2013-14 shall be delayed by the number of pay periods the increases were paid to employees in FY 2011-12 prior to ratification of the agreement. For example, if employees receive increased payments for three (3) pay periods prior to ratification of this agreement, the increases for FY 2013-14 shall be delayed for three pay periods after

15

July 1, 2013. Provided, however, employees will be made whole for the difference in percentage between the July 2011 increase received, and the wage increase effective July 2013. 3. Funds and other payments - All other funds (e.g., tuition reimbursement) and other wage payments e.g., shift differential, allowances, etc., shall remain in place and continue in the same amounts presently in the respective collective bargaining agreement, except to the extent otherwise called for in the collective bargaining agreements. The current collective agreements shall be extended until June 30, 2016 and unexpended fund amounts shall roll over year to year. Any unexpended funds shall lapse or shall not lapse as of June 30, 2016, in accordance with present rules. 4. Captains and Lieutenants, Supervisors in the Department of Public Safety (NP-9) - This unit will negotiate and arbitrate the provisions of their collective bargaining agreement through June 30, 2016. They will be governed by the other portions of the SEBAC 2011 agreement as outlined herein. 5. University of Connecticut Health Center (AAUP) - This unit will negotiate a new contract which will be submitted as part of this Agreement or separately in the event this agreement is not ratified by SEBAC. If ratified, this unit will be governed by the other portions of the SEBAC 2011 Agreement as outlined herein. B. Longevity New Employees - No employee first hired on or after July 1, 2011 shall be entitled to a longevity payment; provided, however, any individual hired on or after said date who shall have military service which would count toward longevity under current rules shall be entitled to longevity if they obtain the requisite service in the future. 2. Current Employees - No service shall count toward longevity for the two (2) year period beginning July 1, 2011 through June 30, 2013. Effective July 1, 2013, any service accrued during that period shall be added to their service for the purpose of determining their eligibility and level of longevity entitlement if it would have counted when performed. 3. Capped units - Individuals in units with capped longevity shall not receive a longevity payment in October, 2011. 4. Uncapped units - The employer representative and the bargaining unit with uncapped longevity shall meet and discuss the issue of longevity. The parties shall agree on a procedure by which individuals in those units shall contribute an amount equal in value to the amount that was contributed in the Capped units. Default is that uncapped units will give up longevity using the Executive Branch Bargaining unit schedule. 1.

16

C.

Non-economic Terms of contracts. Unions that do not agree to extend their bargaining agreement unchanged can open up to a maximum of eight (8) issues that have de minimus cost and are identified no later than August 31, 2011. The Union must notify the Office of Labor Relations or the appropriate employer representative within two weeks of the date the Tentative Agreement is signed of its intent to open the contract as to noneconomic issues. In the event the union decides to reopen their contract, the State may likewise open up to a maximum of eight (8) issues with a de minimus cost. Negotiation shall begin on these issues no earlier than September 1,2011, unless otherwise agreed to by the parties. Only these issues may be submitted to interest arbitration.

D. Expiration date of individual collective bargaining agreements. All individual collective bargaining agreements shall expire effective June 30,2016

17

ATTACHMENT B - Specifics Relating to Health Enhancement Program B l - Consent to Participate

My enrolled spouse and dependents and I agree to participate in the State of Connecticut Health Enhancement program sponsored by my employer, the State of Connecticut. Information regarding my personal health and the health of my dependents will continue to be protected by all applicable state and federal laws and regulations. I and my enrolled dependents agree to comply with the requirements of the program including the applicable schedule of physical examinations, the applicable schedule of preventive screenings and participation in any of the five disease counseling and education programs should I or any dependent be diagnosed with one or more of the five listed chronic diseases(Diabetes, Chronic Obstructive Pulmonary Disorder or Asthma, Hypertension, Hyperlipidemia (high cholesterol), or coronary artery disease (heart disease/heart failure) I understand my participation may be revoked should I not comply with my commitment to the health enhancement program. I understand and agree that my revocation will make me responsible for higher premium co-shares of $100 per month, a $350 per participant per year deducible, and would make me ineligible for reductions in the co-pays for certain prescriptions and office visits. I recognize that I am required to sign this authorization as a condition of my participation and the participation of my enrolled dependents, if any, in the Health Enhancement Program. I accept the terms of the Health Enhancement Program as listed in the open enrollment Ic materials.

B2 - Required Screenings

While the State Employee Health Plan will continue to cover an extensive schedule of periodic physical wellness examinations and screenings which I may continue to access as covered services under the health plan, participants in the Health Enhancement program agree to comply with the following minimum schedule of physical wellness exams specific schedule of screenings in order to be compliant with the Program : Scheduled Preventive Physical Examinations Well Child Visits: Birth to 1 Ages 1-5 6 exams (lmonth, 2 months, 4 months, 6 months, 9 months, 12 months) one per year and the following

18

Ages 6 -17

once every year

Adult Wellness Physical Examinations: Ages 18- 39 every three years Ages 40- 49 every two years Ages 50 Preventive Screenings Cholesterol screenings every five years from ages 20-29(typically done through a blood test in conjunction with the schedule of wellness physicals above.) every two years from Ages 40-50; every year from Ages 50 + Clinical breast examination for women by their health care provider every three years; mammograms as recommended by your physician; one screening mammogram for every female member who is between age 35 and 39. Cervical cancer screening every three years commencing at age 21 Colorectal screenings beginning at age 50 consisting of screening options as decided by your physician which options include colonoscopy every ten years; CT colonoscopy which may be an appropriate alternative to a colonoscopy; or annual fecal occult blood test. Vision examination: every two years Dental cleanings: two free cleanings per year for participants. Participants not enrolled in dental coverage through the State Health Plan do not have to meet this screening requirement. As to all of the above listed and described screenings, no employee or enrolled dependent shall be required to get a listed and described screening which is against the recommendation of a physician or other health care professional.
B3 . Disease Counseling and Education Programs

+

every year

As is currently the case under the State Health Plan, any medical decisions will continue to be made by you and your physician. Employees and their enrolled dependents in the Health Enhancement Program will have available and agree to participate in disease counseling and education programs which consist

19

of the following components and these are the components you must meet to fulfill your commitment to the Health Enhancement Program. These programs only apply to those employees and their enrolled dependents in the disease states listed in the description of the Health Enhancement Program and in the authorization letter signed by the employee indicating his or her desire to be in the Health Enhancement Program. You will be contacted by a health care counselor familiar with the specific program applicable to your condition or conditions who will explain current strategies to control the disease; you will receive materials to help you and your enrolled dependents to better understand and control or eliminate the disease condition; and you will be provided a variety of on-line and/or printed support tools and materials to further assist you.

20

Attachment C - Health Care Premiums for Certain Early Retirees

1 rrs

tariy 15 i 16! 17! 181 191 201 21! 22! 23! 241 251 Note 1:

of Sen

"5

S 2

5 40.00%! 37.00%l 34.00%i 31.00%i 28.00%l 25.00%l 22.00%! 19.00%! 16.00%! 13^00%! 10.00% 1

4 32.00% i 29.60%! 27.20%! 24.80% 1 22.40% i 20.00%! 17.60%l 15.20%l 12.80%! 10.40% i 8.00%!

3 24.00%! 22.20%! 20.40%! 18.60%! 16.80%! 15.00% 1 13.20%! 11.40%! 9.60%l 7.80%! 6.00%l

2; 16.00% 1 14.80% 1 13.60%! 12.40% i 11.20%! 10.00%! 8.80%! 7.60% i 6.40% I 5.20% 1 4.00% i

1 8.00% 7.40% 6.80% i 6.20% i 5.60% i 5.00%i 4.40%! 3.80%! 3.20%l 2.60% i 2.00%!

Actual healthcare premium Dercentaees are prorated by months. If f e w e r than 15 years of service, use 15. If over 25, use 25. If more than 5 years early, use 5. The p r e m i u m for any given employee w i l l be capped at 25% of the person's actual pension benefit, except that the person's actual benefit w i l l be prorated for employees w h o are less than f u l l - t i m e . No early retirement health care

!

Note 2:

p r e m i u m w i l l be charged f o r any employee w h o has 25 years of service as of July 1, 2011 w h o retires! before July 1, 2013

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Attachment D - Statutory Changes with Respect to Caps in Covered Earnings The following shall take effect on July 1, 2014: Sec. 5-162. Retirement date and retirement income, (a) The retirement income for which a member is eligible shall be determined from his retirement date, years of state service and base salary, in accordance with the schedule in subsection (c) or (d) below, whichever is appropriate, (b) On and after January 1,1984, "base salary" means the average covered earnings received by a member for his three highest-paid years of state service, disregarding any general temporary reduction or any reduction or nonpayment for illness or other absence which does not exceed ninety days; and "covered earnings" means the annual salary, as defined in subsection (h) of section 5-154, received by a member in a year, limited by one hundred thirty percent (130%) of the average of the two previous years' covered earnings; except that the limit shall be 150% for those individuals earning mandatory overtime. Current practice in those units where all overtime is presumed mandatory for this purpose shall be maintained. The limit does not apply to earnings for calendar years before 1984 or for the first three full or partial years of employment. The Retirement Commission may adopt regulations in accordance with chapter 54 determining the procedure to be followed for a member who was not employed on a fulltime basis for the entire two previous years used to develop such limit. Sec. 5-192{f)(c) and Sec. 5-192(z)(c). "Covered earnings" means the annual salary, as defined in subsection (h) of section 5-154, received by a member in a year, limited by one hundred thirty percent (130%) of the average of the two previous years' covered earnings; except that the limit shall be 150% for those individuals earning mandatory overtime. Current practice in those units where all overtime is presumed mandatory for this purpose shall be maintained. Because compensation may be artificially reduced, for example as a result of leaves or absence on Workers Compensation, the appropriate year's compensation will be substituted for any year when the compensation is artificially reduced. The limit does not apply for the first three full or partial calendar years of employment. The Retirement Commission may adopt regulations in accordance with chapter 54 determining the procedures to be followed when the member was not employed on a full-time basis for the entire two previous years used to develop such limit.

22

Attachment E: Retiree Health Care for Teachers Retirement System Covered Employees (1) any payments towards retiree health care by TRS covered state employees under section 10-183(b)(7) of the general statutes shall count against the retiree health care contribution otherwise due from that employee for that year; (2) for purposes of computing any health care premium for an employee retiring before his or her normal retirement age, a TRS covered employees normal retirement date shall be the earlier of the dates he or she could retire normally under TRS or the date he or she could have retired normally were he or she a SERS covered employee; and(3) in all other respects, a TRS covered employee shall be treated like a SERS employee with the same hire date for purposes of eligibility for and/or payments towards retiree health care.

Attachment F - Actuarial Cost of Maintaining Current Normal Retirement Age Beyond June 30, 2022
Use the Charts below to calculate the cost (beginning July 1,2013) of maintaining the current normal retirement age beyond 6/30/2022. This is a one-time decision that must be made Employees before July 1, 2013. Extra contributions will not be returned to employees who leave before 2022 (except those employees who left without vesting under current plan rules). returned upon reaching that new normal age. If you would have 25 years of Service Before You Turn 62 As of June-1,2022, how. many months until you have25years of service and at least aee 60 Fill in your Added Contribution to MaintainMonths before 60 Multiply by months RetirementAge 36 or more 36 .02% 0.72% of pensionable earnings 35 or fewer.02% of pensionable earnings. who work until the new retirement age will have their excess contributions, without interest,

If you would NOT have 25 years of Service Before You Turn 62 As of June 1,2022, how many months until your 62hd birthday^ Fill in your Added Contribution to MaintainMonths before 62 Multiply by monthsRetire me ntAge: 36 or more 36 .02% 0.72% of pensionable earnings 35:bit fewer .02% of pensionable earnings Example 1: I am currently 47 years old with 20 years of service. I will therefore reach 25 years of service before I turn 62. I use the top chart: Step 1: Let's say as of June 1, 2022,1 will be 58 years and 3 months old. That means it

is 21 months until I reach age 60.1 will already have 25 years of service at that point, so that means I missed my current normal retirement age by 21 months. Step 2: I multiply 21 months by .02% which gives me .42% (.0042). That means if I want to avoid the increase in normal retirement age, I would pay an additional .42% starting on July 1, 2013 until I retire, (if I'm Tier II, that's all I pay, if I'm Tier HA, I'd pay 2.42% total). Example 2: I am currently 50 years old with 2 years of service. I will therefore NOT reach 25 years of service before I turn 62. I use the bottom chart:

Step 1: Let's say as of June 1, 2022,1 will be 61 years and 3 months old. That means it is 9 months until I reach age 62. I missed my current normal retirement age by 9 months. Step 2: I multiply 9 months by .02% which gives me .18% (.0018). That means if I want to avoid the increase in normal retirement age, I would pay an additional .18% starting on July 1, 2013 until I retire, (if I'm Tier II, that's all I pay, if I'm Tier IIA, I'd pay 2.18% total) Example 3: I am currently 25 years old with 2 years of service. I will therefore reach 25 years of service before I turn 62. I use the top chart: Step 1: Let's say as of June 1, 2022,1 will be 36 years and 3 months old. That means it more than 36 months until I reach age 60. I will need to buy the full 36 months. Step 2: I multiply the maximum of months by .02% which gives me .72% (.0072). That means if I want to avoid the increase in normal retirement age, I would pay an additional .72% starting on July 1, 2013 until I retire, (if I'm Tier II, that's all I pay, if I'm Tier IIA, I'd pay 2.72% total) Example 4: I am currently 48 years old with 12 years of service. I will therefore reach 25 years of service before I turn 62. I use the top chart: Step 1: Let's say as of June 1, 2022,1 will be 60 years and 3 months old. But I will not reach 25 years of service until August of 2023. I will need to buy the full 13 months because I missed my normal retirement age by 13 month. Step 2: I multiply the 13 months by .02% which gives me .26% (.0026). That means if I want to avoid the increase in normal retirement age, I would pay an additional .26% starting on July 1, 2013 until I retire, (if I'm Tier II, that's all I pay, if I'm Tier IIA, I'd pay 2.26% total)

ATTACHMENT G
The parties have jointly agreed that the Questions and Answers below aptly describe the provisions of the agreement:

Question
Will state employees who opt into the Health Enhancement Program (HEP) in SEBAC 2011 have to change doctors? Is it true that some local pharmacies will no longer be able to fill prescriptions for state employees if the SEBAC 2011 agreement is ratified?

Answer No. Nothing in the plan changes including choice of doctors, hospitals or treatments. You add the health enhancement program to your current plan.

Only partly. There is a new mandatory mail order program, but it affects only "maintenance medications" - prescription drugs you take for a long period of time. Other medications, like antibiotics for strep throat, will continue to be available through the local pharmacies. Even for maintenance medications, the first order for any prescription will be available at the local pharmacy. Renewals will be delivered by mail to your home, with a 90-day supply available for a single co-pay. In addition, all CVS's, and any other local pharmacy that wishes to participate in the maintenance drug network, may serve as a mail drop for those members wishing to pick their mail order prescription up at a pharmacy, rather than receive them at home. You, the state employee, along with your doctor, just as you do now. The HEP is an effort to get the most number of state employees the best information about their health status, and assumes that most people, given the right information, will make the best treatment choices. There are no penalties for making the wrong treatment choices. You must sign a written commitment to get the applicable physicals and screenings listed in the agreement, and if you have one of five listed illnesses to sign up for disease counseling and education. You do not make any promise, and will not be judged on whether you actually follow any recommended treatment approach or take any particular medication. No. The State is self-insured, so the insurance vendors are simply paid fees to administer our claims. Those fees will be unaffected whether you choose to participate in the HEP or not.

Under the Health Enhancement Program, who will decide if a participating state employee is making the best decisions about their own health care?

If there are no treatment requirements for participating state employees, what does the Health Enhancement Program require?

Can insurance companies play "gotcha" with state employees participating on the Health Enhancement Program to raise their rates?

If a state employee has one of the Health Enhancement Program's five listed diseases, do they have to let a third party make their healthcare choices or pay an extra $100 per month?

No. If you have one of the five listed illnesses, and you choose to participate in the HEP, you will get free office visits and reduced pharmacy co-pays for your illness . You will also get disease counseling and education through programs already administered by our current insurance carriers. But counseling and education means what it says - you will get information about your illness and telephone suggestions from a nurse practitioner or other health care professional connected to the disease counseling and education program. You are not required to follow these - the decision about what treatment to get is up to you and your doctor. Starting in 2013, current employees who were not already paying 3% of their salary towards retiree healthcare will start to pay J4% that July, increasing to 2% in July of 2014, and 3% in July of 2015. They will contribute for 10 years, or until they retire, whichever happens first. They get their contributions back if they retire without qualifying for retiree healthcare. And if they can show they have retiree healthcare available from another employer, they can waive coverage. Current employees do not have to meet the 15-year requirement in order to be eligible for retiree health care. New employees do.

How are employees that weren't paying 3% for retiree healthcare going to begin contributing? And what if they leave state service without qualifying or want to waive coverage?

I'm confused by the wording of the new 15-year requirement for retiree healthcare. I understand it will affect all new employees. Is there any way to say more simply how it will affect current employees?

Regarding the new chart of retiree healthcare premium shares for employees who choose to retire before their normal retirement age, is that in addition to the premium share they would currently pay if they choose the POS plan?

No. This premium is instead of the previously existing premium shares.

2 | Page

Is the retiree health care chart for early retirement in addition to the $100 a month future retirees would pay if they choose not to enroll in the Health Enhancement Program?

The $100 a month payment would be in addition to any other premium share owed by a retiree who declines to enroll in the Health Enhancement Program.

Does the language in the new tentative agreement "the maximum salary that can be considered as part of an individual's pension benefit is the amount outlined in Section 415 of the Internal Revenue Code indicate the parties' agreement that hazardous duty members who retire at younger ages are appropriately subject to a lower maximum pension?

No. The Agreement reflects the current federal maximum salary cap for pension purposes. This agreement does not affect the separate federal issue of which hazardous duty employees are covered by the police and fire exemption. The SEBAC unions are jointly seeking to apply the police and fire exemption to all hazardous duty employees to the maximum extent allowed by federal law.

3 | Page

2009 SustiNet Health Partnership Board of Directors
Board of Directors Co-Chair The Honorable Kevin Lembo Board of Directors Co-Chair The Honorable Nancy Wyman
Comptroller Office of the Comptroller State of Connecticut 55 Elm Street Hartford, CT 06106 Phone: 8607023315 Appointed by: Statute

Healthcare Advocate Office of the Healthcare Advocate Post Office Box 1543 Hartford, CT 06144 Phone: (860) 297-3980 Appointed by: Statute

Members of the Board of Directors
Bruce Gould, MD, FACP
Director Connecticut AHEC 263 Farmington Avenue Farmington, CT 06030 Phone: (860) 679-4322 Appointed by: Senate President Pro Tempore

Paul Grady, MBA
Principal Mercer 601 Merritt 7 Norwalk, CT 06856 Phone: (203) 229-6192 Appointed by: House Minority Leader

Bonita Grubbs, MPH, MA
Executive Director Christian Community Action 168 Davenport Avenue New Haven, CT 06519 Phone: (203) 777-7848 Appointed by: Kevin Lembo

Norma Gyle, RN, PhD

Deputy Commissioner Department of Public Health State of Connecticut 410 Capitol Avenue Hartford, CT 06106 Phone: (860) 509-7101 Appointed by: Governor

Jeffrey Kramer, PhD, MBA
Associate Professor-in-Residence and Director Programs in Healthcare and Insurance Studies University of Connecticut School of Business University of Connecticut School of Business 2100 Hillside Road Storrs, CT 06269 Phone: (860) 486-4122 Appointed by: House Majority Leader

Estela Lopez, PhD, MA
235 East River Drive Apt 902 East Hartford, CT 06108 Phone: Appointed by: Nancy Wyman

Sal Luciano

Executive Director Council 4 AFSCME 444 East Main Street New Britain, CT 06051 Phone: (860) 224-4000 Appointed by: Speaker of the House

Joseph McDonagh, CLU, ChFC

200 Post Road Fairfield, CT 06824 Phone: (203) 254-8400 Appointed by: Senate Majority Leader

Members may be emailed by simply selecting their names.

2009 SustiNet Health Partnership Board of Directors
Jamie Mooney
Vice President and CIO Norwalk Hospital Maple Street Norwalk, CT 06856 Phone: (203) 852-3435 Appointed by: Senate Minority Leader

Ex-Officio Members Christine Vogel Michael Starkowski

Deputy Commissioner Department of Public Health Hartford, CT 06106 Phone: (860) 509-7101 Appointed by: Ex-Officio

Commissioner Department of Social Services Hartford, CT 06106 Phone: (860) 424-5008 Appointed by: Ex-Officio

Thomas Sullivan

Commissioner Department of Insurance State of Connecticut Post Office Box 816 Hartford, CT 06152 Phone: (860) 297-3801 Appointed by: Ex-Officio

Members may be emailed by simply selecting their names.

News From:

COMPTROLLER KEVIN LEMBO
FOR IMMEDIATE RELEASE
Contact: Tara Downes 860-702-3308 Tara.Downes@po.state.ct.us

MONDAY, APRIL 18,2011

COMPTROLLER LEMBO'S STATEMENT ON GAAP REPORT
"I fully support the GAAP conversion plan submitted by the Office of Policy and Management to the state legislature today, compiled through a joint effort that included my office. "The comptroller's office has prepared financial reports according to Generally Accepted Accounting Principals for more than 22 years, and has long advocated this format in all areas of state government. I commend Gov. Dannel P. Malloy's administration for taking this important step to implement GAAP, which will provide greater budget transparency. The state's bond rating agencies will also view GAAP in a positive light, which will help to keep state borrowing costs low. "In accordance with this plan, my office will continue to provide GAAPadju~ted financial status reports, as it has done since at least 1988. My office will also continue to assist the administration in any way possible to enable GAAP reporting at all levels of state budgeting and finance."

***END***

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

Anthony McKnight Sr. Plaintiff, v.

File No. 3:10cv1471(MRK)

Date: August 8, 2011 STATE OF CONNECTICUT ET., AL. Defendants,

Plaintiff Motion For Injunctive Relief From State of Connecticut/State Employee Bargaining Agent Coalition Revised July 22, 2011 Agreement
The Plaintiff, Anthony McKnight Sr., files this petition for injunctive relief on behalf of every Black, Negro, African American, Nigger or any other population or class of state employees that will be adversely affected by the ratification and passing into law the 2011 State of Connecticut/SEBAC Agreement signed on July 22, 2011 by Mark Ojakian, Chief Negotiator, representing the Office of the Governor for the State of Connecticut and Daniel Livingston Chief Negotiator for SEBAC. The contract violates petitioners’ Constitutional and Civil Rights. Non represented, this petition for injunction is filed in conjunction with and supplements the original complaint. The contract relates to represented and non represented union and non union employees, requiring those effected to have been retired by October 2, 2011. The plaintiff contends that the defendant intentionally targeted injured negro employees for termination and other artificial reductions violating the plaintiffs rights under the Equal Protection clause of the Fourteenth Amendment.“.

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The Allowance of the ratification of such a contract violates the Contract Clause and Section 4 of 14th. The passage of this ’automatically’ by the legislature impedes the rights of the plaintiff and all Negro employees (Linda Fowlers definition of similarly situated employees referred to injured Negro workers, See Appendix of Commissioner Miles decision of defendant’s response to plaintiffs’ Complaint.) In pertinent Part: The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. The debt incurred by the State of Connecticut is a pension liability relating to a legitimate public interest, authorized by Connecticut General Statute. This, barring Eleventh Amendment immunity claims. The Contract Clause prohibits states from enacting any law that retroactively impairs contract rights. The Contract Clause applies to state legislation. The Contract Clause appears in the United States Constitution, Article I, section 10, clause 1. It states: “…. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.” Equal Rights Under The Law “… All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.” Make and enforce contracts

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“Make and enforce contracts” includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship. Protection against impairment The rights protected by this section are protected against impairment by nongovernmental discrimination and impairment under color of State law. The contract is a well organized subtle agreement which reflects the essence of malicious conduct adopted by the current administration from the previous two administrations. Although the current administration had the ability to solve the issue before the court with the passing of the following legislation enacted as stated in Senate Bill 1239: Sec. 13 (Effective July 1, 2011) (a) The Secretary of the Office of Policy and Management may transfer amounts appropriated for Personal Services in sections 1 to 10, inclusive, of this act from agencies to the Reserve for Salary Adjustments account, upon approval of the Finance Advisory Committee to reflect a more accurate impact of collective bargaining and related costs. (b) The Secretary of the Office of Policy and Management may transfer funds appropriated in section 1 of this act, for Reserve of Salary Adjustments, upon approval of the Finance Advisory Committee, to any agency in any appropriate fund to give effect to salary increases, other employee benefits related to staff reductions including accrual payments, achievement of agency general personal services reductions, or any other personal services adjustments authorized by this act, any other act or any other applicable provision of the general statutes. instead the current administration chose to conspire and continue the racketeering, fraud and biasness and racism. INSTITUTIONALIZED RACISM The Civil Rights Act of 1871 (42 U.S.C.A. § 1983 et seq.) was an early piece of such

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legislation. Section 1983 of the act, passed when Ku Klux Klan violence was widespread, created a federal remedy, namely money damages, for individuals whose constitutional rights had been violated by state officials. Although this statute has been influential and frequently litigated, no relief will be granted under it unless "state action" can be demonstrated. The courts have recognized it is “settled principle that government employment, in the absence of legislation, can be revoked at the will of the appointing officer.” McElroy, 367 U. S., at 896. However in the instant matter, the legislative statutes require that the black employee does not have his employment revoked, just as the Caucasian officer(s) was not involuntarily and constructively discharged. The term, "state action," refers to a discriminatory act committed by a government official or agent. Such action may be taken by a legislative, executive, judicial, or administrative body, or some other person or entity acting under "color of law." Section 1983 does not apply to wholly private or nongovernmental conduct. If action is taken by a private individual cloaked with some measure of state authority, courts will find State Action if one of four tests is satisfied: (1) public function test—state action is found where the government has delegated its traditional responsibilities, such as police protection, to a private party or agency; (2) nexus test—state action is found where there is a sufficiently close connection between the government and a private actor, such as where the state owns or leases property on which private discrimination occurs; (3) state compulsion test—state action is found where the government coerces or significantly encourages private conduct, such as where federal regulations require private railways to conduct urinalysis after accidents; (4) joint action test—state action is found where the government is a

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willful participant in discrimination by a private actor. In the instant matter, State Action,. malfeasance exists through all four tests. The “artificial reduction” of Negro benefits, essentially keeping separate accounting practices for separate classes of people in public accounting must be illegal or dishonest activity especially by a public official or a corporation. FOURTEENTH AMENDMENT Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws. Section. 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void. The State of Connecticut/SEBAC 2011 Contract Agreement directly violates Sections one and four of the Fourteenth Amendment as it relates to black Corrections Officers injured while suppressing inmate insurrection. Equal protection requires that the government treat all similarly situated people alike; Harlen Associates v. Inc. vill. Of Mineola, 273 F.3d 494,499(2d Cir. 2001). Thus, “to successfully assert an equal protection challenge, petitioners must first establish that the two classes at issue are similarly situated.“ Yen Jin v. Mukasey, 538 f.3d 143, 158(2d Cir. 2008). The plaintiff must show that they are “similarly situated in all material respects to the individuals with whom they seek to compare {themselves}.” Graham v. Long Island Railroad, 230 f.3d 34, 39 (2d Cir. 200).

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The word “All” includes Negro employees in the class of individuals eligible for entitlements. Secondly, the provision in the statute is mandatory and not to the discretion of the Workers Compensation Commission as it relates to budgetary reductions at the expense of the Negro.(Section 4 of 14th Amend.) The following Section of an Act concerning the Biennium Budget allows the fraudulent and discriminatory contract agreement to become law. Section 165 states: “Notwithstanding the provisions in Section 12 of Public Act 12-6, section 5-278 of the Connecticut General Statute and joint rule 31 of the joint rules of the senate and house of representative for the 20112012 legislative term. If the General assembly does not call itself into special session in accordance with this subsection, said agreement and any appendices filed with said agreement shall be deemed approved by the General Assembly.” The provisions being allowed in SEBAC 2011 is the very same insurance fraud methodology which brought about the conviction and incarceration of the former governor John Rowland. This agreement attempts to legitimatize the fraud. {See Anthony McKnight v State of Connecticut 1995, United States v. John Rowland} The Connecticut General Statutes 31-51m. 4-61dd Prohibited Employer Activity From retaliatory discharge: “…Cannot discharge, discipline, or otherwise penalize because employee or his/her representative reports a violation or suspected violation or requested an investigation, hearing, or inquiry or if public employee reports to a public body concerning unethical practices, mismanagement, or abuse of authority, unless employee knows such report is false.”

However, when plaintiff filed the original federal complaint in 1995, The former governor John Rowland, Attorney General Blumenthal, Department of Corrections, State Legislative

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Judiciary Committee, Office of Chief States Attorney formed a joint task force to discredit and destroy the plaintiff also see SEBAC V John Rowland et. Al., 13th amendment Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction. 14th amend “………………But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.” {The “Discharge” in terms of penalty is for being a “Black” injured worker. “Leaves and Absences” as referred to in Attachment D, entitled “Covered Earnings” relates to targeted terminations of injured Black Corrections Officers as in the instant matter, “Workers Compensation”, artificial reductions, or slave labor, working for nothing, or for the “White Man“} As in the instant matter, the “artificial reductions” caused the loss of property and family of the Plaintiff.. To “artificially reduce” may be deemed as constructing a Fraud, as this agreement is based on the acts, omissions and concealments of the agreeing individuals, of which the SEBAC is representing thousands of individuals who place a trust in the representation not to be defrauded, nor conspire to commit fraud. The other party to the contract, the state of Connecticut, therefore is at a conflict of interests as it cannot protect the rights of the employee citizens of the state through such a contract. Where a principal can establish both a fiduciary duty {Connecticut State Rep. Betts June

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6, 2011 Amendment B Argument HB6652} and a breach of that duty, through violation of the above rules, the court may find that the benefit gained by the fiduciary should be returned to the principal because it would be unconscionable to allow the fiduciary to retain the benefit. This would be the case unless it can be shown by the State of Connecticut and SEBAC that there was full disclosure of the conflict of interest or profit and that the principal fully accepted and freely consented to the fiduciary’s course of action(this full disclosure of the fraud to reduce African American officers benefits is hidden in an appendix to the agreement ‘in the normal acceptable way or course of doing business’). Discrimination and Fraud should not be a way of doing government business. Moreover the phrase: “Because compensation may be artificially reduced, for example as a result of leaves or absence on Workers Compensation, the appropriate year’s compensation will be substituted for any year when the compensation is artificially reduced,” adopts and incorporates the same fraudulent and criminal deviations from the law that former governor Rowland was found in violation of. The same Judiciary Members, Commissioners, etc are the very same officials that implemented the Rowland agenda, they are now adopted into the Malloy administration as a subsystem.

STATE SENATE AND HOUSE BILL IMPLIMENTERS 6651 AND 6652 The savings spoken of by State Representative Cafero is derived from hour 4, and Minute 35 of the video as he refers to removal of the debt and unfunded liabilities the agreement will artificially reduce from the liability balance of the budget. The suggestion that Representative Cafero is speaking of as a concession is the “write-off” of the negotiated

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savings that cannot be identified. from hour 4, minute 42 to hour 4, minute 45. It involves a secretive negotiated quid pro quo, totaling one point six billion. Audit deficiencies in contracts being: “in the best interest of the state” is argued against by State Rep Giuliani from hour 4 , minute 44- to hour 4, minute 48. While at hour 8, and minute 38 through hour 8 and minute 42 State Representatives Rigsby and Betts attempt to prevent the wrongdoing. Senator Suzio at hour 5, and minute 30 on June 1, 2011 during the Senate session called it ”….. fraud.” The court can compare this agreement in accounting practice to that used by the Comptroller at hour five through five thirty, “misleading” referring to noncompliance to GAAP. Senator McGlauglin also questioned the affect on Government Accountability to no avail. Although Senator Harp is the Co-Chair on the Appropriations and a member of the Governor’s Financial Advisory Board(In statute), and proposes the Modified Accrual Section 26 and opposes any amendments, she insists on not knowing the intention of the governor’s agenda with SEBAC {See Governor Malloy May 13, 2011 Statement of Agreement}. Modified Principles of Accounting can only mask the real budget. Mislead the public. Distorts budget, mask deficit, inflate surplus,(See Comptroller Lembo’s April 5, and 18, 2011 Letters) This modified accrual basis of accountability in the SEBAC 2011 Agreement directly undermines the mandatory entitlements in Connecticut General Statutes 5-142(a), 5-169(i), and 5-257(a) and removes the mandatory execution of duties by government employees. In essence circumventing and undermining the judicial process. The concealment of the first tentative agreement Signed on May 18, 2011 by the two

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parties also violates the contract clause, as details were not made known to the affected principles until July after voting. House Amendment ‘B’ was defeated requiring a review of the agreement. Representative Couto voiced concern that the agreement would become law without the review of the legislative voting on the agreement. As State Representative Carter Stated at hour 8 and minute 44: “The bill is a blank check.” At hour 8 and minute 45 State Representative Walker moved to reject the amendment seeking review of the State of Connecticut/SEBAC 2011 Agreement by the State House of Representatives. Representative Betts at hour 6 and 40 minute thru- hour 6 and 44 minutes and 30 seconds was concerned with the language of the contract as it related to the legislatures obligations and Compliance with the house of representatives fiduciary responsibilities. The neglect of the Malloy Administration, The General Assembly, and Courts in honoring the law is primary underlying factors which results in the Malfeasance and corrupt government activities was first documented in the Federal Complaint filed by plaintiff in Anthony McKnight v. State of Connecticut(1995). During the House Session, State Chief Negotiator Mr. Mark Ojakian can be seen during the house session as overlord to State Rep. Walker as he directs and controls the session from over the shoulder of the state representative Walker for Malloy Administration in particular at Hour 4, and minute 49 to hour 4 and minute 50. This alliance is obvious throughout the session and as State Senator Harp, Representative Walker is Co-Chair of the House Appropriations Committee and is member of the Malloy Administrations Financial Advisory Committee. Unlike the statement by Senator Harp during debate with Senator Suzio: “No committee determined that any fraud occurred“, the language in both contract and bills

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introduced signifies not only fraud but also a conspiracy to cover-up the fraud and knowledge of the fraudulent behavior. The relationship with Senator Harp and the Malloy Administration is solidified within Section 165 of the Implementer Legislation when it references “appropriations” and “Office of Policy and Management.” The surplus money referred to is actually “artificially reduced” entitlement benefits from Attachment D of the State of Connecticut/SEBAC agreement. They are re-appropriated defrauded funds from the State’s unfunded pension liabilities. One of the many concerns and objections to the agreement by the house of representative members is the Office of Fiscal Analysis can not determine where the savings are coming from. Collective Bargaining allowed the under funding of pension liability for years using the criminal methodology of the Rowland Administration. The SEBAC agreement shows the Intent of the Malloy Administration not to fund pension liabilities as the adoption of the agreement validates and confirms the corrupt practices of the past. This agreement forgives the pension liability Retroactively, with the blessing of SEBAC, creating greater unpredictability and accountability for unfunded pension liabilities. The Proper Accounting Techniques are being used by the Comptroller’s Office. Therefore, the accounting used in reference to this agreement is fraudulent, as stated in supporting legislation, “modified”, fake, illusionary, as indicated in the Act concerning the budget Senate Bill 6651 Section (26), and Senate Bill 6652 Section (77). Senate Bill 6651 In Pertinent Parts: (1) "Accrual basis" means the basis upon which, in transactions thereon, revenues are accounted for when earned or due, even though not collected, and expenditures are accounted for as soon as liabilities are incurred, whether paid or not;

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(26) "Modified accrual" means a basis of accounting where revenues are recognized when earned only so long as they are collectible within the period or soon enough afterward to be used to pay liabilities of that period and expenditures are recognized in the period in which they were incurred and would normally be liquidated Sec. 77. Subsection (a) of section 31-71b of the general statutes, as amended by section 34 of house bill 6651 of the current session, is repealed and the following is substituted in lieu thereof (Effective from passage): (a) (1) Except as provided in subdivision (2) of this subsection, each employer, or the agent or representative of an employer, shall pay weekly all moneys due each employee on a regular pay day, designated in advance by the employer, in cash, by negotiable checks or, upon an employee's written request, by credit to such employee's account in any bank that has agreed with the employer to accept such wage deposits. (2) Unless otherwise requested by the recipient, the Comptroller shall, as soon as is practicable, pay all wages due each state employee, as defined in section 5-196, by electronic direct deposit to such employee's account in any bank, Connecticut credit union or federal credit union that has agreed with the Comptroller to accept such wage deposits. Sec. 165. (Effective from passage) (a) Not later than five calendar days after the agreement between the state and the State Employees Bargaining Agent Coalition, signed by both parties on May 27, 2011, is filed with the clerks of the Senate and House of Representatives, or June 30, 2011, whichever occurs first, the General Assembly may call itself into special session for the purpose of approving said agreement. Notwithstanding the provisions of section 12 of public act 11-6, section 5-278 of the general statutes and joint rule 31 of the Joint Rules of the Senate and House of Representatives for the 2011-12 legislative term, if the General Assembly does not call itself into special session in accordance with this subsection, said agreement and any appendices filed with said agreement shall be deemed approved by the General Assembly. Subsection (a) of this section, except that terms concerning wages for employees of the legislative branch shall be applied by the Joint Committee on Legislative Management in accordance with subsection (e) of this section. On or before June 30, 2011, the Secretary of the Office of Policy and Management shall submit a plan to the joint standing

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committee of the General Assembly having cognizance of matters relating to appropriations and the budgets of state agencies detailing how the terms of said agreement will apply to non represented classified and unclassified officers and employees. On or before June 30, 2011, the Chief Court Administrator and the Executive Director of Legislative Management shall submit a plan to the joint standing committee of the General Assembly having cognizance of matters relating to appropriations and the budgets of state agencies detailing how the terms of said agreement will apply to non represented classified and unclassified officers and employees of the Judicial Department and the legislative branch. (b) Notwithstanding any other provision of the general statutes and except as provided in subsections (c), (d) and (e) of this section, the Commissioner of Administrative Services and the Secretary of the Office of Policy and Management shall apply terms comparable to those contained in the agreement described in subsection (a) of this section to all non represented classified and unclassified officers and employees upon approval of said agreement in accordance with. ((d) On or before August 1, 2011, and notwithstanding the provisions of sections 45a-75, 46b-233, 51-12 and 51-47, the Chief Court Administrator or the judges of the Supreme Court shall consider and implement changes to longevity payments and wages for officers and employees of the Judicial Department comparable to the longevity and wage payment provisions of the agreement described in subsection (a) of this section. Nothing in this subsection shall apply said wage provisions to any such officers or employees whose wages are established by statute. This contract removes the impediment that former Governor Rowland faced in dealing with insurance fraud etc.. This agreement allows current governor Malloy to implement the previous administrations fraud tactics with the blessings of the legislature and union without any risk of the same criminal convictions, as this agreements gives the governor permission to create and maintain a criminal scheme. As through the SEBAC V ROWLAND {See Attachment} complaint which since has been removed, through the passage of the budget implementers in conjunction with SEBAC 2011. It will allow unilateral, capricious and arbitrary acts to be committed by the governor, which punishes objectors and rewards

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supporters. This method is not based on the law or merit but on the discretion of those in charge within the administration, the subsystem which can covertly violate with malicious intent and wanton disregard for the constitutional and civil rights of the afflicted employee(S). The entitlements and pension of the petitioner is not only established by Connecticut General Statute 5-142(a), 5-169(i), and 5-257(a) it is supported by Connecticut Attorney General Blumenthal prior to the implementation of the Rowland/Lawlor Workers Compensation insurance fraud scheme which the agreement seeks to criminally validate and certify. The benefit principles of his opinion only apply to White People and those in league with the administrative policy goal of adopting and not correcting the Rowland Era mistakes.. (See Plaintiff’s Amended Complaint Attachment: Attorney General 1990 Opinion) In relevant part, Section 4 of the Fourteenth Amendment states In pertinent part: {“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”} The Black Officers in this matter were actually in the performance of his guard duties when ordered to help in the suppression of a uprising in the correctional facility {See Plaintiff Amended Complaint Attachment Incident Report}. Each officer was terminated per the new agreement and have not received the pension benefits of Caucasians. The Connecticut Statutes specifically references pensions and benefits along with those liabilities to the state authorized by law. However, as the same members that created the fraud are also the members of government that have the duty to investigate the fraud; making any protection of the

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petitioner rights by the state of Connecticut impossible. {Please See Federal Civil complaint McKnight v. State of Connecticut 1995.} Relevant part: “No State shall……..pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of contracts” As in the matter of McKnight v. State of Conn.(1995), and the instant complaint, Commissioners have knowingly defrauded injured Negro workers specifically as a matter of their appointments to judge. In the testimony submitted {The Commissioner Delaney and Miles Transcripts, Appen. ‘K’ amended complaint}, White People are giving preferential treatment as it relates to benefits issued directly by the Union negotiators Sal Luciano, and State Negotiators Yelmini, and Ojakian, {See Attached Retirement Commission Meeting record} {Note: individuals receiving their benefits are all white and three are giving excessive discretionary benefits, while in the case of the Negro, none received the benefits required by Law. The benefits received by the Caucasian were not required by the law, yet they received overly generous benefits.} The “similarly situated “ class of individuals referred to in the Fowler testimony in the commissioner Miles decision referred to “similarly situated” black officers, as being terminated and having the benefits artificially reduced. Similarly situated didn’t apply to the white officers because they were giving their mandatory statutory benefits, and excess. The similar class exists in the fact that White Corrections Officers as Black Corrections Officers worked together and received similar injuries. However, Black people are not giving mandatory statutory benefits, Commissioners appointed by the governor are obligated per their appointment to order “artificial benefits” to the Negro. {See the fraudulent check and other fraudulent

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documents Amended Complaint append C and D}. These “leaves or absences” are actually terminations or “artificial reductions” of Injured Negro employees entitled benefits when they are out of work due to work compensable injuries. It directly violates the Connecticut General Statutes, The Contract Clause, and Section 4 of the Fourteenth Amendment {See Plaintiffs Executive Order 38 Append.‘E’ and ‘J‘} The Delaney decision, a product of the Rowland fraud methods, artificially reduces and eliminates the entitlement of the Negro employee because the commissioners take away the right established by law for the injured Negro to “ELECT” benefits most advantageous to his position as is in the case of injured white corrections officers. Both the Miles and Delaney decisions takes away the Liberty of the Negro to choose. Which is a First Amendment Violation of the Constitution. Constructive fraud, or discharge, Discrimination, artificial adjustments-when it is based on acts, omissions or concealments are considered fraudulent and gives one an advantage against the other because such conduct, demands redress for reasons of public policy. The fraudulent activities of Governor Rowland were implemented with then Judiciary CoChairs Lawlor and McDonald and are actualized and adopted by the Present Malloy Administration as a subsystem being “artificially“, as stated, and fraudulently implemented, impeding the rights of the Negro to make a “choice” merely because the person is Negro, or not Caucasian. Within the “State of Connecticut/SEBAC Agreement, Attachment ‘D’” Statutory Changes with Respect to Caps in Covered Earnings which takes effect on July 1 2014,states as follows : Section 5-192(z) (c). “Covered earnings” means the annual salary, as

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defined in subsection(h) of section 5-154, received by a member in a year,…………… Current practice in those units where all overtime is presumed mandatory for this purpose shall be maintained. Because compensation may be artificially reduced, for example as a result of leaves or absence on Workers Compensation, the appropriate year’s compensation will be substituted for any year when the compensation is artificially reduced.” The contract through the Connecticut General Statutes require that the entitlements be paid to “all” employees at a bi-weekly or monthly bases. It also requires that the accrual liabilities be resolved on an accrual accounting bases and not on an artificial/fraudulent “modified accrual” practice. However, this does not happen for the Negro. The white people get the accurate accounting while the Negro receives artificial accounting. {Lembo letter} As a state law, the agreement would interfere with the rights of the plaintiff and state employees. A Breach of duty clearly exist on both parties to the agreement. Unless the fiduciary can show there was full disclosure of the conflict of interest (Sebac v Rowland ) or profit and that the principal fully accepted and freely consented to the fiduciary’s course of action. The plaintiff does not consent. It is within the resolve of the SEBAC argument in SEBAC v ROWLAND that the interests of the Negro Employees are not considered in the agreement as in the instant complaint of Anthony McKnight v. State of Connecticut. Artificial or fraudulent benefits only relate to the Negro and not the Caucasians. {Constructive fraud Discharge/Discrimination/artificial adjustments}-when it is based on acts, omissions or concealments considered fraudulent and that gives one an advantage against the other because such conduct, demands redress for reasons of public policy.

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Wherefore, the plaintiff respectfully requests that this court issue an order and ruling finding the: (1). The Revised 2011 Agreement Between State of Connecticut and State Employees Bargaining Agent coalition (SEBAC) Signed by Daniel E. Livingston, Chief Negotiator, Sebac and Mark E. Ojakian, Chief Negotiator, State of Connecticut, is in violation of the Constitution of the United States and the General Statutes of the state of Connecticut. (2). The contract is null and void.

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BY:__________________ Anthony McKnight Sr. P. O. Box 304 West Haven, Conn. 06516 Tel: (203) 675-7722 Email: AnthonyMcKnightSr@gmail.com

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Revised Tentative SEBAC Agreement Summary (July 22nd, 2011) - Working Document
Please note the following applies to the content presented in the table that follows: [1] Pending questions in certain areas remain for which additional information/clarification/data has been requested. Or for which specific actuarial assumptions are unavailable. [2] Savings for some provisions may be less based on the actual date of ratification. [3] For provisions where data/information was unavailable, assumptions were made to access the achievability of the savings. [4] Savings are not necessarily cumulative.

Agreement Provisions & Reported Savings
FY 12 Pension Changes FY 13 (in 000's) 20-Year Projection Notes

Discussion & Analysis
Notes Re: Savings Achievability [2]

Provision 1: Cap salary that can be considered as part of an individual’s pension benefit as provided under the Internal Revenue Code

$

2,400 $

2,500 $

Under the Internal Revenue Code, the current federal ceiling on pensionable salary ($245,000 in 2011) applies to the base salaries of pension plan members. Salary earned in excess of this amount may not 62,000 be used in determining member contributions and benefits.

Provision 17 Related Savings: Pension savings due to 2 year wage freeze

$

69,316 $

71,198 $

Provision 2: Change the minimum COLA for individuals who retire after 10/2/11 from 2.5% to 2.0% with the highest amount going from 6.0% to 7.5%

$

32,525 $

34,315 $

140,000 Savings estimated for biennium only. Annual adjustments each July 1st. For employees retiring after 6/30/99, the annual adjustment will be 60% of the increase in CPI up to 6% and 75% of the increase in CPI over 6%. This adjustment will be no less than 2.5% and no greater than 6%. Current SERS actuarial COLA assumptions: Pre July 1, 1980 Retirees = 3.6%; 1980 - 1997 Retirees = 3%; Post July 1, 1997 Retirees = 2.7%. As actuarial assumptions are currently set above this new minimum, it is unclear how savings will be 1,342,000 achieved.

Achievable. The State currently does not place a ceiling on pensionable salary. Therefore, adopting the federal cap would generate the estimated pension savings in SERS. Partially Achievable. Current actuarial assumptions provide for 4% annual wage growth. In addition, the state's annual required contribution (ARC) is calculated as a percentage of projected annual payroll. By reducing this base annual payroll by 4% in FY 12 and assuming no increase in FY 13 and applying the ARC percentage, the estimated savings are partially achieved.

Provision 3: Change the Early retirement reduction factor from 3% to 6% for each year before eligible to take Normal Retirement with associated health care savings

$

35,000

$

32,400

$

Reflects ARC reduction, however 3/4 is attributable to health savings which assumes individuals retiring closer to age 65. Pension savings is $8,917,000 in FY 12 and $8,479,000 in FY 13. Retiree health savings is 662,000 $26,083,000 in FY 12 and $23,921,000 in FY 13.

Achievable. As of the 2010 SERS valuation, the state paid $1.26 billion in annual retiree benefits. A 0.5% reduction in COLA would equate to $6.3 million in savings annually. Additional savings would accrue as future COLA increases would be based on a lower base pension benefit. In addition, this change in actuarial assumptions would result in a lower annual required contribution (ARC). Pension Portion- Achievable. Increasing the penalty for early retirement should result in an actuarial gain to the SERS retirement fund and in turn, a reduction in the annual required contribution (ARC). Health Portion- Uncertain. Savings to retiree health are probable assuming more individuals will likely retire closer to age 65 when the cost to the state to provide health care is less as individuals are Medicare eligible. However it is unclear how the full estimated savings are achieved.

Provision 4: Increase the Employee Contribution to 3% for Retiree health care trust fund for all employees (not just new employees) phased in beginning 7/1/13.

$

-

$

-

$

Specific assumptions are not currently available to assess the validity behind the 20 year projected savings. The amount of the savings would depend on the number of current employees and new employees anticipated, who are not currently contributing, the duration for which they would be contributing, and their wages. In FY 11, employee contributions for retiree health was approximately $22 million. The agreement does not specify when the state will begin using the funds to pay current retiree health expenses. It is assumed, as those individuals who contributed retire the state will use employee contributions to offset Achievable. Underlying assumptions for reported savings are unknown, retiree health expenditures for those employees. however, by applying reasonable assumptions, savings to retiree health are achievable. The extent of the savings would depend on various factors outlined in the notes and when the state would begin using employee contributions to pay Although state will make matching annual contributions between 2017- retiree health expenditures. Any savings would be offset by the state's costs to the OPEB fund from 2017 through 2022. 871,000 2022, these costs are not reflected.

Page 1 of 4

Agreement Provisions & Reported Savings
FY 12 Provision 5: For current employees who retire after 7/1/2022, Normal Retirement eligibility increase from Age 60 and 25 YOS or Age 62 and 10 YOS to Age 63 and 25 YOS or Age 65 and 10 YOS. By 7/1/13, present employees may elect to pay the actuarial pension costs of maintaining the normal retirement eligibility that exists in the present plan which is scheduled to change effective July 1, 2022. Provision 6:New Tier III for individuals hired after 7/1/11, Normal Retirement eligibility Age 63 and 25 YOS or Age 65 and 10 YOS and salary based on Final five year average; HD 20 Years of HD service and age 50 or 25 Years of HD Service regardless of age and salary based on final five year average pay; Early Retirement Age 60 and 15 YOS; Ten year cliff vesting. FY 13 20-Year Projection Notes

Discussion & Analysis
Notes Re: Savings Achievability [2]

$

22,000

$

22,000

$

677,000

Achievable. Estimated savings for this provision would primarily result from the change in actuarial assumptions and a lower annual required contribution (ARC), as it would be anticipated more employees would delay retirement (meaning less years of retirement benefits to be paid and additional years of employee contributions helping to offset state costs). Additional savings may be attributed to healthcare?

$

-

$

9,649 $

Short-term savings in FY 13 are unclear as differences in state costs between Tier IIA and new Tier III have not been provided. Short-term savings will also depend on the number of new hires during the biennium, which are anticipated to be low due to the hiring freeze as 2,982,000 well as leaving 1,000 retirement vacancies unfilled. PS savings - based on leaving ~ 1,000 positions unfilled @ $65,000/yr avg salary. Savings will depend on the extent to which these positions remain unfilled and how closely actual average employee salaries at 1,300,000 retirement are in comparison to assumed salary levels.

Partially Achievable. Short-term savings are unclear as no difference in Tier IIA versus Tier III benefits or employee contribution levels. Savings likely attributable to having same normal cost as Tier IIA, but no payments toward unfunded liability (as there are for Tier IIA). Savings will also depend on the number of new hires in the biennium, which are anticipated to be low due to the hiring freeze as well as plans to leave 1,000 retirement vacancies unfilled. Achievable. Based on personnel savings from keeping 1,000 positions at an average salary of $65,000 unfilled. Savings will depend on the extent to which these positions remain unfilled and how closely actual average employee salaries at retirement are in comparison to assumed salary levels. Achievable, however savings in biennium would result from current ARP participants and new potential ARP participants choosing the hybrid plan. To achieve estimated savings, more than 50% of current ARP participants would need to switch to the hybrid.

Provision 7: Increase number of retirees due to absence of ERIP; reduce refills Provision 8: Provide the availability of individuals in the Alternate Retirement Plan to switch to a Hybrid-Defined benefit/Defined contribution type plan. Pension Total

$

65,000

$

65,000

$

$ $

10,750 $ 236,991 $

11,190 $ 248,252 $

235,000 8,271,000

Health Care Changes The plan (health and pharmacy) will no longer be recognized as grandfathered plans under federal health care reform. As such, there are certain services for which the plan would not be allowed to charge a copay or have annual maximums. It is unclear if the savings are adjusted for any changes as a result of the plan no longer being recognized as a grandfathered plan. The savings would depend on the number of emergency room visits which would be subject to the copay and the extent to which the prior authorization provisions decreases utilization. 75,000 The data on total current utilization is unavailable. The savings assumes 50% of those eligible to participate in the value based plan will enroll. The savings may or may not be offset by assumptions about changes in utilization as a result of the value based participation requirements. Additional information was provided which states the savings assumes a 10% reduction in claims costs for health, but no corresponding back up on how that assumption was reached has been provided. Further, there is some suggestion that utilization increase for dental services was assumed, as 2 cleanings are required a year by the value based plan, however specific assumptions about increased utilization are and associated costs are unknown. The increased utilization costs in dental services have not been factored into savings estimates. The savings for the program overall are stated to be net of any increased utilization. It is uncertain what assumptions were made about changes in utilization.

Provision 9: Plan Changes value and non value based: $35 Emergency Room copay; Certain cost savings changes wherein individuals would have to get preauthorization before a second MRI would be paid for, etc.

$

1,200

$

3,700

$

Uncertain. Savings are likely assuming a portion of emergency room visits will be subject to the copay and certain services will likely not be authorized. If it is assumed 50% of the savings is attributable to emergency room copays, an estimated 17,143 visits in FY 12 and 52,857 visits in FY 13 would be subject to the copay.

Provision 10: Value based health and dental Provide a Value based health and dental care plan under which individuals and their families could chose to participate and agree to follow all plan and physician recommended physicals, disease management protocols and diagnostic testing. Failure to comply would result in the individual and their families being placed in the Nonvalue added plan with the concomitant cost increase. The cost for this plan would the same as the current plan plus any scheduled experience determined increases. Value Added for Retirees – Voluntary for current Retirees; Mandatory for individuals who retire on and after 10/2/11. If new retirees elect nonvalue added, cost is $100 per month.

$

102,500

$

102,500

$

A breakout of the components of this figure are not currently available, additional information would be required to assess the validity of the 2,378,000 figures.

Uncertain. If it is assumed 50% of employees and their dependents participate in the value based plan or 27,493 active employees and the remaining 50% do not participate and therefore are subject to the increased premium share for an entire plan year, equal to $1,200; approximately $32.9 million in savings will be achieved in FY 12 and FY 13 (32% of the total savings). It is uncertain if any actual savings in health claims costs can be achieved in the first few years of a value based model. Any savings would be offset by increased utilization for those services required by the value based plan and not currently utilized by employees and their dependents.

Page 2 of 4

Agreement Provisions & Reported Savings
FY 12 FY 13 20-Year Projection Notes

Discussion & Analysis
Notes Re: Savings Achievability [2] Figure reflects the savings associated with the $350 deductible only. The savings appears to assume 50% of those who would be required to enroll in either the standard or the value based plan, end up paying the deductible. The deductible has been valued at $22.89 per member per month, or approximately $275 per year.

Provision 11: Nonvalue based health and dental - If the employee chose not to participate their cost for health care would be the same as calculated in the first year for Value based, plus $100.00 per month additional. Institute a $350 Medical Deductible per year per individual.

$

18,000

$

18,000

$

Uncertain- Savings are likely as services not currently covered by a co-pay would be subject to the deductible. Services eligible for co pays and cost sharing are It is unclear if the $350 deductible provision would be able to be limited by federal health care reform. If it is assumed 50% of eligible implemented at the start of the fiscal year by the carriers. The savings employees participate in the value based plan, and the deductible is assumed to would depend on the extent to which employees choose to participate in have a per member per month value of $22.89, the state would save the value based plan, when the $350 deductible and increased premium approximately $18.2 million a year. However this assumes those individuals provisions are implemented, and which services are subject to the $350 whose services are subject to the deductible utilize services up to the deductible maximum. 249,000 deductible. It is unclear what drugs were assumed in the savings estimate (and not already account for in the budget) and the degree of utilization and cost of those drugs to the employee health plan. Savings are achievable regardless of the SEBAC agreement. The SEBAC 2009 agreement requires mandatory generic substitution.

Provision 12: Reduce Costs with Generics - drugs coming off patent

$

1,500 $

12,000

$

380,000 Savings would be achieved regardless of the agreement. These programs already exist, for which information is currently unavailable. The savings could be achieved without the agreement. The savings could be achieved to the extent participation in the programs result in decreased health care costs, which are more probable over the longer term. It is unclear if the savings have been offset by any assumptions about how many individuals would be eligible for the $100 incentive payment 85,000 in the out years.

Provision 13: Tobacco and Obesity - reduce costs through voluntary referral Program Provision 14: Other Health Cost Containment Initiatives - the Healthcare Cost Containment Committee will identify additional cost savings through renegotiation of contracts and improved service delivery Provision 15: Pharmacy Copays and Mandatory Mail Order for Active Employees and New Retirees: Increase to $5, $20 and $35 for non maintenance drugs. Additional drugs coming off patent which will now be available as generics. Mandatory Mail Order maintenance drugs for active employees, future retirees and current retirees under 65 must be ordered through the mail. Voluntary for current retirees over 65 (mandatory once enrolled).

$

1,000

$

2,000 $

Unachievable. Programs are currently offered without an incentive payment; participation rate is currently unavailable. It is unlikely the incentive payment, offered to an individual only after three years of weight management of smoking abstinence will be sufficient to encourage additional participation. Savings from decreased health care costs may present in the long term to the extent that a significant percentage of the population participate and have improved health.

$

40,000

$

35,000

$

The HCCC does discuss/implement provisions to reduce health care 420,000 costs. (e.g. Patient Centered Medical Homes, High-Flier ER users, etc) Mail order and retail pharmacy drugs have two separate price points. In general, mail order drugs are cheaper because of sheer volume. Additional prescription plan specific information would be needed in order to access the figures and provide analysis. In addition it is unclear if there is any assumption as to changes in utilization as a result of the changes. For example, it is unclear an increase in utilization was assumed for maintenance drugs for individuals with chronic conditions 698,000 as a result of decreased or waived copays. This provision should result in a savings as it requires individuals to have 15 years of actual state service in order to be eligible for retiree health. Currently, individuals with 10 years of state service are eligible for retiree health. In addition, the Rule of 75 would still apply, wherein the individual's age plus years of service must be equal to at least 75. However, state service must be equal to at least 15 years in order to be eligible for retiree health. The savings estimates assumes on average 15 employees per month retiree with less than 15 years of state service and retiree health savings increases by 10% per year. In addition, the savings appears to be associated with individuals who retiree closer to age 65 when they are 987,000 Medicare eligible and the cost to the state to provide health care is less. 5,272,000

Achievable. Projected savings from updated contract terms for FY 12 and FY 13, for both medical and dental are $38.9 million in FY 12 and $38.6 million in FY 13. Actual savings may be less depending on ratification.

$

19,876

$

20,500

$

Uncertain. It is unclear to what extent the increased copays for nonmaintenance drugs, for which current utilization is currently unavailable, will offset the decreased copays for maintenance drugs, for which current utilization is also unavailable. It is unclear if the savings assumes an increase in utilization and compliance with prescription drug regimens for individuals with chronic conditions, such as diabetes, for which copays are waived.

Provision 16: Minimum Service for Retiree Medical – Increase to 15 years of actual state service for Normal, early retirement and HD retirement with continuation of Rule of 75 for Deferred Vested. Health Care Total

$ $

3,822 $ 187,898 $

9,705 $ 203,405 $

Uncertain. Savings are likely as the earliest an individual would be able to retire and be eligible for retiree health benefits is 60, as opposed to 55; which is 5 years closer to Medicare eligibility than the current plan allows for. The state saves approximately $11,650 a year, per retiree if they retire and are Medicare eligible.

Page 3 of 4

Agreement Provisions & Reported Savings
FY 12 Other Changes and Cost Savings FY 13 20-Year Projection Notes

Discussion & Analysis
Notes Re: Savings Achievability [2]

Provision 17: Hard Wage Freeze – FY 2012 and FY 2013 No state employee would receive any increase in salary for either of the next two fiscal years, including no payment for individuals who were at their top step as a bonus. $ Provision 18: Adjust break point in 2, Tier 2A and Tier 3 Provision 19: Salary Increases - FY2013-14, FY 2014-15 and FY2015-16 - provide Three Percent plus step increases or their equivalent in those units with them Provision 20: Technology Initiatives - utilize new te $ Provision 21: SEBAC Budget Savings Initiative implement savings ideas proposed by employees to reduce costs in agencies through reduced procurement costs, more efficient agency operations and other initiatives. Provision 22: Longevity – No longevity payment would be made in October, 2011 to those units with capped longevity and an equivalent savings amount would be negotiated from those with uncapped longevity. No one during the biennium will have those years count for that period. Individuals first hired on or after 7/1/11 (military service counts) would never receive a longevity payment. Other Changes and Cost Savings Total Grand Total 40,000 $ 50,000 $ 138,852 $ $ 309,550 $ 6,330,000 (458,000)

- $

Achievable, however due to the anticipated two month delay in implementation, general wage increases, annual increments and lump sum payments for bargaining units with existing settled contracts were provided as of July 1st. This will reduce FY 12 estimated savings by $3.8 million each pay period until the agreement is ratified. Assuming 4 pay periods, savings would be reduced by $15 million (GF & TF). It is anticipated that this would be recovered at the start of FY 14. It is anticipated, however, that lump sum payments would be recouped in the biennium, thus this would reduce FY 14 recoveries needed. Uncertain. The fiscal impact of an adjustment to the breakpoint cannot be determined as details have yet to be established.

$ $

(600,000) 1,000,000

No savings indicated. Cost in out-years. Uncertain. The fiscal impact cannot be determined as information as to the focus of or methods use have not be established.

$

90,000 $

90,000

$

1,800,000

Uncertain. The fiscal impact cannot be determined as information as to the focus of or methods use have not be established.

$ $ $

7,000 $ 275,852 $ 700,741 $

- $ 449,550 $ 901,207 $

53,000 8,125,000 21,668,000

Achievable. The April 2011 longevity payment for capped units was approximately $6.3 million for all appropriated funds. The April 2011 longevity payment for uncapped units (including non-union employees) was approximately $11.5 million all appropriated funds. Therefore, estimated savings are more than achievable in FY 12.

Agreement also includes the following: Extension of SEBAC through 2022 Extension of Job Security through FY 2015, with increased flexibility on geographic limits for reassignment New Retirement rules effective 10/2/2011 Comparable provisions for managers Beginning July 1, 2017, the state will match employee contributions to the Retiree Health Care Trust Fund

Page 4 of 4