Treasurer Urges CHET Rollover, Employer CHET Credit and STO Paydown; Committee Asks for More Data

Treasurer Eric Russell told the Finance, Revenue and Bonding Committee on March 14 that two proposals before the panel would modernize the Connecticut Higher Education Trust (CHET) and use excess special transportation fund capacity to reduce long‑term STO debt.

Why it matters: Russell said changes to CHET would align state rules with recent federal roll‑over law and create a 25% tax credit for employer contributions to employees’ CHET accounts — capped at $500 per worker — to encourage employer‑backed college savings plans. Separately, he described a mechanism the state used last year to eliminate $534,000,000 of outstanding STO debt and said continued paydowns would free future debt‑service spending for more projects.

The CHET proposal: Russell summarized the CHET changes as (1) allowing all federal‑permitted rollovers of CHET balances into other tax‑advantaged accounts, and (2) establishing a 25% employer credit for contributions to employee CHET accounts (other states he cited include Colorado, Illinois, Nevada, Pennsylvania, Wisconsin and Idaho). He told the committee CHET direct has about $5,000,000,000 in assets and nearly 200,000 accounts, and that the CHET Baby Scholars program has paid out about $1.6 million to eligible accounts as of June (of the fiscal reference year reported).

On the special transportation fund (STO): Russell said the STO‑paydown bill formalizes a practice of using excess STF capacity to reduce STO bond principal when the STF exceeds certain reserve thresholds. He said a prior paydown eliminated $534 million in STO debt and is projected to save taxpayers about $682 million in debt service over the next decade. When asked whether paydowns would affect project funding, Russell said it would not impair DOT’s ability to fund projects and may improve the state’s debt profile.

Committee questions and follow-up: Lawmakers asked about experience in other states for employer CHET credits and for empirical evidence of whether the credit increases contributions; Russell offered to provide uptake and evaluation information later. Representatives also asked for more detail on STF reserves and on timing for building out projects; Russell said reserve levels were “just over $500” million and that project deployment timing depends on DOT readiness and contractor capacity.

What’s next: Committee members requested written follow‑up on (a) fiscal modeling and uptake examples from the six states Russell named and (b) STF reserve figures and timeline for projected STO paydowns.

Ending: The treasurer left the committee with the panel’s request for comparative data; members asked staff to circulate the treasurer’s written testimony and additional state comparisons before any vote or bill markup.