MMA letter to House leaders supporting pension reform, with certain changes

The Honorable Robert DeLeo, Speaker of the House
The Honorable Brian Dempsey, Chairman of the House Committee on Ways and Means
The Honorable John Scibak, House Chairman of the Joint Committee on Public Service
State House, Boston

Dear Speaker DeLeo, Chairman Dempsey and Chairman Scibak,

On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association would like to go on record supporting the majority of S. 2007, a bill that would modernize the municipal pension system, and urges you to make two specific changes during House deliberations to strengthen the Senate’s version and ensure the $5 billion in savings guaranteed under this legislation.

The Senate bill mirrors many important prospective changes first introduced in the governor’s bill in January to ensure the long-term health of the public pension system, including increasing the minimum retirement age for most employees, basing employee pension benefits on their highest five years of earnings instead of their highest three years, and pro-rating benefits for retirees who worked in several classification groups. These changes are necessary and forward thinking, and we commend the Legislature and governor for making this important public policy issue a top priority.

While much of S. 2007 would make positive changes to make the pension system sustainable for state and local government and current and future taxpayers, we have serious concerns regarding two aspects of the legislation.

First, we ask you to oppose an extremely expensive unfunded mandate provision that would impose an enormous cost on cities and towns: the section that mandates a $1,000 increase in the base for the calculation of cost-of-living adjustments (COLAs), from the current base of $12,000 to a new base of $13,000. This one provision could cost the state and municipalities as much as $2 billion from now through 2040. Just last year, the Legislature passed and the governor signed a measure that would allow communities, at local option, to increase the COLA base by increments of $1,000 up to a maximum of $18,000. We urge the House to delete this unfunded mandate from S. 2007 and pass a clean pension reform bill that allows the current local option decision-making process to stand.

Also, during Senate debate, an amendment was unanimously adopted that would lower the pension contribution for certain employees with at least 30 years of service by 2.5 percent and then another 2.5 percent when they achieve 35 years of service. In the original bill, the contribution reduction did not take effect until an employee reached 35 years of service. We ask that you keep the length of service for a reduction in contribution at 35, thus not further burdening the system.

With these two changes, we believe that this important legislation will strengthen the pension system, reduce the burden on taxpayers, and provide a viable and sustainable benefit for public employees for many years to come. Thank you for your interest in this important matter.

If you have any questions, please do not hesitate to contact us at any time.

Sincerely,
Geoffrey C. Beckwith
Executive Director, MMA