The state lottery may hold one key to solving the state government’s pension problems.
At least Arunan Arulampalam makes that argument.
Arulampalam, one of four Democrats vying for the Democratic Party nomination for state treasurer, is proposing that Connecticut dedicate a portion of its lottery revenues to shoring up the finances of its two main and underfunded employee pension funds.
How to fix the pension fund — the teachers’ fund is currently only 54 percent funded — is a central challenge facing whoever gets elected this fall to succeed retiring State Treasurer Denise Nappier.
Arulampalam, the Zimbabwean-born son of parents who hailed for Sri Lanka, faces Shawn Wooden, Dita Bhargava (who had originally explored a gubernatorial run before switching to this race), and John Blankley (who dubs himself the most qualified treasurer in state history) for the Democratic nod. The party holds a nominating convention this weekend; a primary is expected to ensue, including at least some of the four hopefuls.
The Republican Party last weekend endorsed Thad Jones for state treasurer.
The state treasurer manages investments on $60 billion in state assets, including $34 billion in pensions for 212,000 state government retirees.
In an interview on WNHH FM’s “Dateline New Haven” program, Arulampalam, a 32-year-old attorney who lives in Hartford’s South End, said he considers all his Democratic opponents as qualified for the job. He said he is running on a set of specific policy porposals, like the idea of dedicating the lottery revenues.
He also said the state has to revise downward its forecasts of the annual rate of return on its pension fund investments, down from the current (and repeatedly inaccurate) approximately 8 percent figures of recent years to more like 6 percent. The state must also step up its contributions to the fund in anticipation of balloon payments that will otherwise raise their annual slice of the state budget from around $1.3 billion to $6 billion by 2032, Arulampalam predicted.
Arulampalam’s ideas went beyond how to manage the pension funds. He called for dedicating a portion of the office’s annual investments in venture capital funds directly to the quasi-public Connecticut Innovations to support biosciences and other new-economy business enterprises.
“The treasurer’s office can be a real voice on economic development,” he said.
He was asked how that would dovetail with his goal of improving the pension fund’s performance — because his proposal would narrow the universe of potential investments. “We can match that rate of return” through Connecticut Innovations (CI), he argued. For starters, he said, a CI-dedicated stream wouldn’t require paying as much money in fees as other venture capital investments do. He said he has worked directly with CI as an attorney at Updike, Kelly and Spellacy, where he specializes in debt and equity financing (a role he said equips him for performing the treasurer’s job). Based on that experience, he said, he believes CI investments can produce as high a rate of return as other investments.
His proposal would also help focus the state’s investments in new job-creating tech businesses. Right now, he said, Connecticut spends more money per capita than any other state on economic development, without that needed focus.
Arulampalam agreed with Democratic opponent Wooden that Connecticut should divest from gun manufacturers, in which the treasurer’s office currently invests $16.9 million.
“I’ve seen the effects of gun violence in my community,” he said. “A young man was gunned down in front of his daughters” in the South End, he said.
He added that based on gun manufacturers’ current performance, divestment would even make economic sense.
Click on the above audio file or video below for the full interview with state treasurer candidate Arunan Arulampalam on WNHH FM’s “Dateline New Haven” program.
Click on the above audio file of the Facebook Live video below to hear a previous interview with treasurer candidate Shawn Wooden on WNHH FM’s “Dateline New Haven” program. Click here to read a story about that interview.