MMA raises concerns to Public Service Committee about series of bills that would add pension and OPEB costs

The Honorable Michael D. Brady, Senate Chair
The Honorable Jerald A. Parisella, House Chair
Joint Committee on Public Service
State House, Boston

Dear Senator Brady, Representative Parisella, and Members of the Committee,

On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association appreciates the opportunity to submit the following comments on bills before the Committee that were heard on May 29. We have serious concerns regarding a number of bills that would either credit employees for service or include new members under the governing statute for public employee retirement, M.G.L. Chapter 32. We respectfully ask the Committee to consider local government’s position and concerns regarding legislation that would increase the unfunded liability for public employee pensions.

The MMA strongly opposes the following bills on the Committee’s agenda for the May 29 public hearing, for the reasons set forth below:

• H. 2160, An Act relative to the creditable service for local municipal police and the Massachusetts State Police (Representative James Arciero)
• H. 2180, An Act relative to creditable service for school business administrators (Representative Gerard Cassidy, and others)
• H. 2195, An Act relative to the retirement system (Representative Tackey Chan)
• H. 2206, An Act requiring creditable service for Massachusetts National Guard service (Representative Claire Cronin)
• H. 2225, An Act relative to creditable service and notice by certified mail (Representative David DeCoste)
• H. 2267, An Act relative to the Massachusetts teacher retirement system (Representative Susan Williams Gifford)
• H. 2311, An Act relative to creditable service for school nurses (Representative Kathleen LaNatra)
• H. 2332, An Act relative to creditable service for VISTA volunteers (Representative David Muradian, Jr.)
• H. 2339, An Act clarifying call firefighter rights (Representative Harold Naughton, Representative Kimberly Ferguson, and others)
• H. 2342, An Act authorizing certain public employees’ creditable retirement service (Representative James O’Day)
• H. 2351, An Act relative to teachers’ retirement credits for parochial schools (Representative Angelo Puppolo, Jr.)
• S. 1557, An Act relative to the active service buy-back program for firefighters and police officers (Senator Jason Lewis)
• S. 1582, An Act relative to non-public school service (Senator Michael Rush)
• S. 1593, An Act relative to the retirement options of certain educational personnel (Senator Walter Timilty)

Cities, towns and local taxpayers are already struggling to fund their existing multi-billion-dollar unfunded pension liabilities, and face an equally staggering unfunded obligation for other post-employment benefits (OPEB), most of which is retiree health insurance costs. Communities are doing their best to fund their pension schedules, and are in the very early stages of addressing their unfunded OPEB liabilities. All of these legislative proposals would clearly add to the heavy burden that local taxpayers are bearing. Importantly, it is impossible to quantify the magnitude of the new cost that would be imposed on taxpayers without an actuarial analysis of each of these bills. This alone is sufficient reason to oppose these measures.

Adding members to a retirement system or awarding members more creditable service would certainly increase pension costs. In addition, proposals to enhance pension eligibility would also increase municipal OPEB liabilities, because crediting employees with additional years of service time would increase the number who reach the 10-year mark to vest in the pension system, thus increasing the number who qualify for lifetime retiree health insurance benefits. The impact of this legislation, therefore, is not only to pension costs; these bills would also increase costs associated with retiree health insurance coverage, and ultimately to taxpayers.

Without an actuarial cost analysis and a thorough discussion regarding the cumulative effect of similar legislation from past sessions, we believe it would be imprudent for the Committee to advance these bills. We respectfully ask you to oppose these bills, and not report them out of Committee.

If you have any questions or need additional information, please do not hesitate to have your office contact me or MMA Senior Legislative Analyst Lisa Adams at 617-426-7272 at any time.

Thank you very much.

Sincerely,

Geoffrey C. Beckwith
Executive Director & CEO