Wednesday, January 19, 2011

A step forward, back, in pension reform

We applaud Governor Patrick's recently-announced plan to reform state public employee pensions by raising the retirement age to 60 and by eliminating "double-dipping" and "spiking."

There is a lot to like in the Governor's plan, which would appear to save the state money and also bring public benefits more into line with those in the private sector.

But one thing we don't agree with is the Governor's proposal to extend the timetable for paying down our state's $20 billion unfunded pension liability by 15 years, stretching it from 2025 to 2040.

No doubt this move is part of the Governor's plan to address a gaping budget shortfall in next year's budget, since extending the repayment window will reduce annual budget transfers to cover the pension fund gap. But it's also a costly long-term move for Massachusetts taxpayers. We also question what affect it might have on our state's bond rating.

We understand the need for short-term fixes in our budget, but we also think it's necessary to keep long-term effects in mind. Our state's unfunded pension liability is an albatross around our neck that needs to be addressed. We can't keep postponing the inevitable by extending the timetable for repayment.


  1. How does postponing closing the liability become "costly?" Doesn't it remain the same -- that is, isn't it the same liability owed to the same class of pensioners it's just that the governor is giving the state more time to make good on closing the gap? (The liability is if all the pensioners had to be paid their entire pensions at once.)

    Doesn't it make sense to avoid the one time hit to the budget and allow the state pension fund to make up the difference through stock market momentum and investments in hedge funds and other vehicles bound to do well as the economy improves?

    BTW, surprised to see you didn't call for ending state pensions for government workers. Why should state workers have guaranteed retirements when private sector workers don't have guaranteed jobs or retirement.

  2. To Anonymous,
    if you are concerned about the unfunded pension liability, then that is only the tip of the iceberg. You should be doubly worried about the unfunded health insurance liability sitting out there. But wait, there may be a real cure since Deval is so hep on getting Obama care sustained. Wonder if he will make a move to subject ALL state workers, current and retired, to be covered by Obama Care and eliminate state provided insurance.

  3. So Obamacare (Obummercare) is a good thing now? Yes that's the elephant in the room, and I wonder if the elephants in the State House will address it. Seeing as how they and their DINO friends depend on it, I'd guess not.

  4. And next up....Deval Solar (Aka Evergreen) looks like another hole that the state has poured millions of our dollars into with ZERO return. Nice going, Deval et al. No wonder we have finance issues at the state level.....

  5. I've got it.....lets acquire the entire Evergreen Solar operation by eminent domain because it is on state land or attach all their assets for default on the notes from the state. Then sell it to the employees and let them make solar panels and stay employed. Sounds like a jobs enhancing move to me....and a way to screw Evergreen once and for all. By the way, now we see Deval getting deep into operations @ Massport....the hallowed halls of hackville. Watch this saga play out.....


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