Town employee pension funding

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Town employee pension funding

Postby dougsears on Mon Mar 31, 2008 3:06 pm

Barney:

I am continuing to learn.

The state does not want to take on the financial responsibilities of receivership unless a community is at death's door.

Tewksbury is still alive and definitely kickin'.

Short of receivership, I am learning, is the "control board."

The attached article from the Mass. Municipal Association describes its birth and function in Springfield.
http://www.mma.org/index.php?option=com_content&task=view&id=177&Itemid=92

A major part of Tewksbury's problem is that if we "hit the wall," it will be when scores of other communities do so at the same time.

There is no safety net.

Over-rides do not solve the problem, they just extend the inevitable.

Local problems need local -- not state -- solutions.

I just hope to be part of the team that finds them -- or, that solutions can be found at all.

Doug
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Town employee pension funding

Postby U8Coach on Mon Mar 31, 2008 3:33 pm

The State does not want to take over the towns because there is no way in hell they can assign that sort of administrative manpower. Therefore they will continue to lower the bar and leave the towns to fend for themselves.

The issues at hand are the same that have been crippling the budget for years, and thus far none of the following have taken place:

Union contracts which the town can afford. In fact we have worsened the problem over the last three years.

More money to help with the relatively unfunded State mandates. The mandates get more costly and the aid decreases year after year.

New growth at a pace which would alleviate the budget problems.

I strongly feel that our local representation reverts to the override/fee system of budget solutions far too quickly instead of approaching the issue as if such an avenue of escape did not exist.

Save the overrides for capital improvements and not for structural budgetary issues. Fees are a cop-out. Nobody wants to be paying for town services a-la-cart. What's next, neighborhood funds to get your roads plowed or repaved?

Do the job, balance the budget, and if you are not ready to get your hands dirty then get out.

I believe that Doug is willing to do the job. He may try to put on a big show, he may overdo it from time to time. Tell you what - I'll take that over a mouthpiece anyday.
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Town employee pension funding

Postby swamper on Mon Mar 31, 2008 3:54 pm

Tune in to the Selectmen debate tonight, Channel 10 at 7:30 pm.... or better still, come on over to Town Hall and watch it all go down!
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Town employee pension funding

Postby PJJ on Thu May 29, 2008 6:47 pm

It just gets better and better. If you need a reason to contact our local legislators, this is it.
http://www.lowellsun.com/editorials/ci_9413306

Wrong time to increase pensions
The Lowell Sun
Article Last Updated: 05/29/2008 08:55:23 AM EDT


Massachusetts lawmakers didn't have the political will to reform police details, but at a time of financial crisis they do have the will to allow supporters to continue to feed at the public trough.

Communities are slashing programs and positions because of rising costs and stagnating revenues, yet the House and Senate are considering higher pensions for state and municipal employees.

We realize retirees have to pay increased gasoline, heating and food bills, but they already receive an annual 3 percent pension increase. The additional boost now being proposed by lawmakers for state employees could cost a staggering $8 billion over 20 years, according to research by the Pioneer Institute.

If municipal workers are able to participate -- as has been proposed in the Senate -- cities and towns would have to come up with at least $2 billion over the next two decades, according to information from the Massachusetts Municipal Association.

Neither the state nor municipalities can afford to fund such legislative munificence. Needless to say, the additional dollars would have to come from taxpayers' pockets, reduced services to taxpayers or, most likely, both.

Is that fair?

The pension increase received each year by public-sector retirees already meets or exceeds the raises earned by the vast majority of private-sector workers. Those workers also pay higher gas, heating and food bills. Most won't receive a pension and must put money aside for retirement. Many can't afford to.

Why should struggling taxpayers be forced to reduce their household budgets so public-sector retirees can enjoy a greater pension increase? Who will help taxpayers -- some of whom would work a second job if only they could find one -- pay their bills?

Retirees' union leaders argue it's only another $120 a year per pensioner. That doesn't sound like much. But multiply that figure times the current number of retirees, future retirees and the years they will receive the increase, and that equals billions of dollars.

The House and Senate will make a costly mistake if they approve this increase. Unfortunately, taxpayers will be the ones forced to pay for their error.
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Town employee pension funding

Postby sean_czarniecki on Thu May 29, 2008 7:31 pm

This is Massachusetts' idea of pension reform....
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Re: Town employee pension funding

Postby sean_czarniecki on Mon Jun 27, 2011 6:59 am

http://online.wsj.com/article/SB1000142 ... inion_main

The Local Government Pension Squeeze
Annual retiree costs in Providence, R.I., now amount to an astounding 50% of city tax collections.
By STEVE MALANGA
Although Democratic Mayor John DeStefano has enjoyed a good relationship with the New Haven, Conn., municipal unions through most of his 17 years in office, lately those ties have frayed. He says that workers' wages and benefits have become "the Pac-Man of our budget, consuming everything in sight," and must be cut. His budget-trimming proposals, including calls to privatize some jobs, have brought angry city workers into the streets in protest, and celebrity protester Al Sharpton to agitate for their cause.

While the national media has focused on state budget face-offs between government unions and governors such as Wisconsin's Scott Walker, municipal officials like Mr. DeStefano are engaged in their own budget warfare. Wages and benefits account for 30% of state general fund expenditures, according to data from the National Governors Association. But U.S. Census surveys show that in the typical town or school district, employee pay and benefits can consume from 70% to 80% of the budget.

Pensions are an enormous part of the problem. While pension payments now consume about 4% of state budgets, many municipalities are already spending 15% to 20% of their finances on pension costs. Earlier this year, California's Little Hoover Commission, a government oversight agency, observed: "Barring a miraculous market advance and sustained economic expansion, no government entity—especially at the local level—will be able to absorb the blow [from rising pensions] without severe cuts to services."

Costa Mesa, Calif. (population 110,000) made news earlier this year when it sent layoff notices to 43% of its employees. In 10 years, the city's annual pension bill increased to $15 million from $5 million and now consumes 16% of the city's $93 million budget. In nearby Anaheim, pensions already account for 22% of its $252 million budget. San Jose's pension costs for police and firefighters have quadrupled in a past decade. Without reform, the city estimates that its yearly pension costs, $63 million in 2000, will swell to $650 million in 2015.

Elsewhere the numbers are even scarier. Chicago's unfunded public pension fund liabilities are estimated by Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester at $44 billion—nearly eight times annual city tax revenues. New York City's annual pension contributions were $1.5 billion (6% of city revenues) in 2002. They've exploded to an estimated $8.4 billion (18% of city revenues) in 2012.

School districts in New York State contributed $900 million last year to the state's teacher pension system, but districts may have to spend as much as $4.5 billion on pensions within five years to meet rising costs, according to a December 2010 study by the Manhattan Institute. Local property taxes would have to increase an average of 3.5% a year just to pay for those added pension costs, the study estimated.

Local governments have contributed to their budget nightmares by expanding hiring and wages well beyond the growth in population and private wage gains during recent boom years.

In New Jersey, where student enrollment increased by just 69,000 students from 2000 through 2009, public schools hired 33,000 new full-time staffers—nearly one for every two new students. California's local governments padded their employee count by 15% in the decade leading up to the fiscal crisis in 2008, with average annual pay rising 60%, to $61,185 (not counting the cost of benefits), according to the Little Hoover Commission.

The budget pain is likely to worsen. Since 2008, states have balanced their own budgets in part by reducing the financial aid they send to municipalities and school districts. And although the main source of revenue for many municipalities—property taxes—kept rising during much of 2008 and 2009 because of multiyear property assessments that stretched back to good economic times, collections are now starting to plummet.

Many cities that have employed budget gimmicks in the past have run out of alternatives. To balance its 2010 budget, Providence, R.I., borrowed some $48 million (using its fire stations as collateral); it also drained most of its reserve fund, which shrank to $3 million from $17 million in one year. But the city remains under severe budget pressure—its annual retiree costs now amount to an astounding 50% of its tax collections, according to a new study from the Rhode Island Expenditure Council.

After years of hiring increases, officials surveyed by the National League of Cities estimated that they have cut their work forces by about 9% in the last two fiscal years. More reductions are on the way. Cities like New Haven, Detroit and Chicago are all looking at outsourcing jobs in areas like trash collection or custodial services to the private sector, where costs are generally lower.

Local politicians are also arguing that states need to reduce onerous unfunded mandates on municipalities. More than half of the states have laws requiring local school districts to limit the size of classes, according to a 2008 survey by the National Council on Teacher Quality. To give local schools flexibility in trimming their budgets, the Florida legislature last month cut the number of courses schools offer that must meet the state's strict class-size mandates.

In the end, the most far-reaching budget reform for many states would be to fix their pension systems, whose rules often govern local pensions, too. Calling pension and employee health-care costs among the main drivers of local budgets, a coalition of New Jersey's mayors heavily backed Gov. Christie's reforms passed last week, which require greater pension contributions from government workers. New York City Mayor Michael Bloomberg wants the state legislature to raise the retirement age for government workers to 65 from 55, and to calculate retirement pay according to an employee's base pay only, excluding overtime.

Images of angry government workers occupying state capitols have made for compelling television. But the compensation monster is a far more serious threat to local budgets, and it has officials desperately fighting back.

Mr. Malanga is the author of "Shakedown: The Continuing Conspiracy Against the American Taxpayer" (Ivan R. Dee, 2010). This op-ed is adapted from a forthcoming issue of the Manhattan Institute's City Journal, where he is senior editor.
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