The average pay for state employees has risen from $69,743 in 2018 when Gov. Ned Lamont took office to $94,675 in 2025, an increase of more than 35 percent, following a seven years of pay increases starting in 2019 and going through 2025 negotiated by former Gov. Dannel Malloy and Lamont and the State Employees Bargaining Agent Coalition (SEBAC), according to the latest actuarial report on Connecticut’s State Employee Retirement System (SERS).

The average state employee salary between 2018 and 2025 beat out inflation by $3,000, even following the sky-high inflation rates of 2022, and the number of active state employees remained essentially the same during that time, according to the analysis.

Nearly all Connecticut state employees are covered under collective bargaining agreements between state employee unions and the state of Connecticut, which dictate pay and benefits. Former Gov. Malloy in 2017 negotiated a series of concessions from SEBAC at a time when Connecticut was facing serious budget deficits, which included wage freezes between 2016 and 2018, followed by a one-time bonus, and then two 3.5 percent general wage increases and step increases in 2019 and 2020.

Lamont, who was elected twice with state employee union support, reached an agreement with SEBAC in 2022 that awarded general wage increases of 2.5 percent each year between 2022 and 2025, along with bonuses and step increases typically valued at 2 percent. 

The governor’s office is again in the midst of negotiating new labor contracts with SEBAC. Arbitrated agreements with unions in the Judicial branch indicate state employees will likely see another round of 2.5 percent general wage increases along with step increases, particularly as the state continues to show surpluses for the next few years.

A state employee union at the Department of Correction distributed flyers claiming their pay increases have not kept up with inflation since 2016. According to the average pay information in the pension analysis, the claim holds up when going back as far as 2016 and 2014 due to the wage freezes at the time, but during Lamont’s tenure, state employees have enjoyed consistent raises that compound year over year.

Total active state employee pay now accounts for $4.6 billion in 2025, an increase of $1.2 billion since 2018.

According to that same table, however, as state employee pay increased so did the state’s total liabilities, even as Connecticut paid down billions in unfunded pension liabilities through the volatility cap, part of 2017’s bipartisan fiscal guardrails which deposits surplus revenue largely tied to Wall Street investments first into the Rainy Day fund and, when that is full, into paying down pension debt.

Connecticut made its first extra deposit into SERS to pay down the unfunded liabilities in 2020 and since then has contributed an extra $6.5 billion toward the state employee pension debt. Unfunded liabilities only decreased by $5.1 billion, while total employee pay grew by $1 billion and total liabilities grew by $6.7 billion.

The pension payoffs, however, don’t move in lockstep with the unfunded liabilities, which are subject to changing market conditions and retirement patterns. Although the state has had good run of beating its 6.9 percent return assumption lately, 2022 saw a market loss of 8.1 percent, according to the report, marking a swing of roughly $2.55 billion in the negative, losses that get smoothed over by actuaries in their reports. 2022 also saw a surge in employee retirements due to changing retirement benefits.

Regardless, the SERS funded ratio increased from 38.5 percent to 59.6 percent between 2020 and 2025, and the pension debt pay down has resulted in $533 million less annual pension payments, according to the latest valuation.

Gov. Lamont and State Comptroller Sean Scanlon touted these numbers at a recent press conference, announcing that Connecticut was contributing another $1.5 billion to both SERS and its other major and troubled pension system for teachers, the Teachers Retirement System (TRS).

Reached for comment, Rob Blanchard from the Office of the Governor said they couldn’t comment on ongoing negotiations with SEBAC but that, “Governor Lamont remains committed to working collaboratively with our labor partners to ensure fair and reasonable wage adjustments.” 

Blanchard also pointed out that, according to the Office of Fiscal Analysis’ Fiscal Accountability Report, 76 percent of the state’s unfunded SERS liabilities are for employees who have already retired, and that “87 percent of the state’s FY 2027 contributions will go toward addressing this unfunded liability.”

According to that report – which can only account for current spending levels, fixed costs, and anticipated revenue trends – if the economy and state budget remain stable for the next three years, Connecticut taxpayers can count on paying down more than $1 billion in pension debt each year between FY 2026 and FY 2028, and then exceed $700 million each of the following two years. 

Naturally, that surplus revenue is dependent on market conditions that can be volatile, and many lawmakers have been calling for the volatility cap to be adjusted to enable more spending.

According to OFA’s report, which notes that wage increases are “the largest contributor to non-fixed cost growth,” the state has set aside $126.8 million to pay any costs associated with future wage agreements, which rises to $153.2 million in FY 2028.

During a press conference in December of 2024, Lamont touted the state’s savings from paying down the pension debt, saying it freed up money for a tax cut for working and middle-class families, allowed access to daycare for more families, and covered the cost of community college for “tens of thousands of folks.”

According to the Comptroller’s Open Connecticut website, the average state employee pension has increased from $37,910 in 2018 to $44,961 in 2025. Pensioners receive cost-of-living increases based on the rate of inflation. Former chair of the UConn School of Business John Viega, one of Connecticut’s top pension earners, saw his pension increase from $320,498 in 2018 to $401,304 in 2025. Overall, six former state employees have pensions of over $300,000.

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