STRATFORD — “Extraordinary pension benefits” granted to recent Stratford retirees, particularly police and firefighters, have left the Pension Fund more than $70 million short and is bankrupting the town, leaders of a special financial review committee say in a newly released report.

The report questions the town’s ability to continue funding the pension plan through tax hikes, and suggests the problem will jeopardize the town’s ability to issue bonds, attract new businesses and residents, and could force the curtailment of municipal services and infrastructure maintenance.

That warning was issued this week to the Town Council by Ed Rodriguez, chairman of the Financial Advisory Committee, a panel appointed to study the impact of the town’s pension pay-outs and to make recommendations on how to solve the problem.

“This is a serious issue and must be addressed,” Robert Sammis, a committee member told the council. “The town is running right into a brick wall and the system must be changed.”

The issue is tied to old union contracts dating back decades, which had allowed police and firefighters to collect a lifetime pension based on a formula that averages total pay, including overtime, during the final two years on the job.

While the town was able to remove that provision from the police contract in 1996, establishing a new system that determines final pension numbers on average base salary only, officers already in the department were grandfathered so that when they retire their benefits are still calculated under the old system, referred to as Plan A.

Under that plan some officers can still collect pensions higher than their base salaries, such as police Capt. Gene Vedock who retired two years ago and Capt. Mark DeLieto, who retired last year. Both were on the force 27 years and had base salaries of $82,000. But Vedock’s annual pension for life is $107,000 and DeLieto’s is $134,525. Those benefits were attained when both amassed overtime hours during their last 24 months on the job.

“The effects of “Plan A pensions will be effecting the town’s contribution for the next 15 to 20 years of granting pensions and another 30 to 35 years of the retirees’ or spouses’ life (or until approximately the year 2068),” the committee states in its report.

“The plan requires ever increasing annual contribution to the pension trust over the next 23 years, rising from under $6 million currently to over $24 million in 23 years,” the report states. “This plan already incorporates upward tax pressure on the budget each year.” But the full extent of the pension shortfall cannot even be determined at the present time, the report states.

Finance Director John Norko said that as of July 2007 — the latest complete Pension Fund numbers available — there was a $72.9 million shortfall, with $208.9 million in total liability and $136 million in assets.

Norko said the shortfall is likely to even worsen over the next decade, but that a long-term plan will gradually help the fund’s liability to be eliminated by about 2030.

The committee advises that the town “address the root causes of the overtime, its mandated staffing protocols and inflexibility in managing the assignment of overtime.” The report also states that the Plan A pensions are “more generous” when compared to those in surrounding towns such as Fairfield, Milford and Trumbull.

Some council members said they were stunned by the extent of the pension plan’s problems.

“This is obviously very disturbing and something needs to be done,” said Councilman Joseph Kubic, R-9. “I think a meeting of this committee and the Pension Board must be scheduled as soon as possible.” Council Majority Leader Mike Julian, R-1, said, “What I would like to know is whether there is any evidence of abuse.”

The report, however, indicates no evidence of intentional wrongdoing. “We were not able to ascertain wrong doing either in the manner these pensions were earned or in the calculation of the pensions,’ the report states.

Town Council Chairman Michael Henrick, R-9, a member of the Pension Board, said nothing in the report surprised him.

“It was a situation caused years ago when previous town councils negotiated the Plan A pensions, but the Pension Board and our actuaries have been working to solve the problem,” he said.

“The committee hasn’t told us anything we don’t already know or that the actuaries don’t know, and we have taken aggressive steps to solve the problem by putting a stop to the practice of underfunding the pension or using excess investment returns for budgetary items,” Henrick said. “We have implemented intelligent and conservative guidelines to ensure this doesn’t happen again.

“Yes, these $100,000 pensions have hurt the town significantly. But both the mayor and council of the last six years have learned from the mistakes of the past,” he added.

The committee agreed with that, stating, “The town recognized the future financial impact of a generous pension benefit to be extremely burdensome on the Stratford’s taxpayers and unsustainable in the long-term,” according to the report. “As a result, they negotiated a ‘Plan B’ in 1997, where pensions are calculated and paid on base salary for newly hired employees.”