The city of Bridgeport has completed a pension bond sale that raised $96 million to pay down a $200 million long-term unfunded pension liability the city faced covering retirement costs for current and former police officers and firefighters.
The measure will save Bridgeport taxpayers approximately $2 million per year in net debt service payments for the next 26 years over the life of the bonds, resulting in total savings to taxpayers of approximately $48 million.
The bond sale was made possible through special legislation sponsored by the Bridgeport delegation and adopted by the Connecticut General Assembly during the 2017 legislative session. That action gave Bridgeport the statutory authority to issue taxable bonds to pay off more than $200 million in unfunded pension liability into the Connecticut Municipal Employee Retirement System.
“This is the kind of outside-the-box thinking we need to tackle our short- and long-term fiscal challenges as a city and as a state,” remarked Mayor Joe Ganim. “We’re showing we can do this while operating more efficiently and lowering borrowing costs as we search for savings to absorb major state budget cuts.”
The bond sale was approved by the Bridgeport City Council in August and was coordinated by the Bridgeport Finance Department. It was underwritten by Morgan Stanley, coordinated with outside financial advisor Public Finance Management, and attorneys from the firm Pullman and Comley as bond counsel for the city.
The bonds were sold with an average interest rate of 4.53 percent, with all proceeds to be deposited into the Connecticut Municipal Employee Retirement System pension fund at the closing date in early January.
Prior to the legislation, Bridgeport was locked into paying $7.5 million in amortization payments for the next 26 years into the Connecticut Municipal Employee Retirement System to cover unfunded pension liability. Ganim said that liability was created because the city did not transfer enough assets into the fund when it moved the fire and police pensions to state management in 2013.
The fund at the time covered the Bridgeport deficiency but charged the city an 8 percent interest rate on the its annual payments.
The news came on the heels of reports that Ganim would officially enter the gubernatorial race on Jan. 3. However, Ganim apparently inadvertently announced his candidacy on Twitter last night by posting “I’m seeking your support for the office of Governor of Connecticut” under the handle “@GanimforCT.”
Under state campaign finance laws, he legally became a candidate by issuing such a post. The account has since been deleted, however, leaving some doubt as to whether Ganim is now officially a candidate. His office did not immediately return calls for comment.