The article in the paper is about unfunded pension liability in the SouthCoast. As noted in the article, it is not a problem isolated to our area, nor just our state. Does Detroit's pension liability play a big factor in its financial woes? Of course.
Does such liability play a part in the fiscal constraints local communities, including Fairhaven, face year in and year out? Absolutely.
Is any community in our area heading to receivership? Not that I am aware of, and absent some calamity that would force many communities to that point, Fairhaven won't be there in the foreseeable future.
That is not to say the issue isn't a problem.
Any significant downturn in the economy, and therefore the stock market, will have a detrimental effect to our funding plan. Even under the current plan, the town will start to be squeezed more and more noticeably by FY 2019 and each year thereafter.
There certainly is a need for attention, and at a minimum some tweaking (in some areas big tweaking) to the pension laws in the commonwealth (with limited, but at times significant, exceptions it is state law that controls the actions of local boards). I am not sure however I can buy into the economy of scale argument.
It would be nice to see a similar article year in and year out, with maybe a few followup pieces detailing the whole pension picture. The biggest problem facing communities is just barely touched upon in the article. People retiring at younger ages, living longer, under a system that was created under certain assumptions that no longer exist.
The funding mandates came into place because prior to those mandates communities simply were doing very little planning. The reality is the mandates that exist are there to keep you out of Detroit's shadow.
Unfunded pension liabilities do cause a slow leak of money, and the leak will get a bit worse each year under the funding mandates, until such time as the mandate is met, which under the current law is no later than 2040 (as an FYI Fairhaven's current funding plan is to be totally funded in FY 2032).
Once you reach the plan goal, it then becomes a pay as you go system. What can affect that schedule, again the economy and market conditions, increases in salary over and above salary increase assumptions, adding more people to the system are factors that come most quickly to mind.
The long and the short of it is the schedule is in place to get yo to where you should have been all along. Pay as you go.
The funny part of the article, it doesn't even address the bigger problem of unfunded government share of retiree health insurance costs.
But I will leave it there. There isn't the time or space in a daily blog to deal with the specifics on this one.
What else today?
Well next week we have the selectmen meeting on Thursday. BPW meets on its regular day Monday. School Comm. is meeting Monday.
Nothing directly today on the election or the turbines. Worth the bold print. Maybe I should have started the blog today with that, might have saved some of you the time in reading to get down to this point.
"Open Line" format today for commenting. The one caveat: today means today. It also means comments to be posted for this piece. Make sure when you send your "open"comment, you do so under today's piece.
As always, comments to be published must meet the rules of the blog. Essentially think "town meeting" procedure.
Before I close, I just want to add something.
The following is taken from Wikipedia. It is as good an explanation for the saying as any, so here it is:
The idiom "The pot calling the kettle black" is used in a situation where a person is considered guilty of the very thing of which they accuse another. It dates from the time when cooking was done over an open hearth fireplace; both the kettle and the cooking pot would be suspended above it and collect the same amount of soot.Quite frankly, I am seeing a heck of a lot of this going on. Truth be told it has been going on all along.
Before you say something, do something, post something, keep that in mind.
Enough for today. Be safe.
The pension news piece about pensions in s-t.com today said Fairhaven had 63.4 % of the funds covered as of 2012.
ReplyDeleteState Sen.Mark Montigny also said allowing elected officials into the pension system could cause major headaches.
The answer to the pension question liability is term limits. Fairhaven needs to look into term limits for all its future elections.
Has a study committee ever been formed to look at the local unfunded liabilities ?
I am not going to debate term limits for elected officials on the town level. Neither the issue of pensions for "them". I don't see term limits for the vast majority of local elected officials at the amounts they are paid at town level, and I mean vast, being a solution pension woes.
ReplyDeleteQuite frankly using that aspect to support term limits is not a strong argument for me on the term limit issue.
Granting employee benefits to elected officials in the first place is a big issue on the financial front. No elected official in a policy making position should in my mind be eligible for employee benefits.
I think you would see a great deal of necessary reform in many areas if the "benefits" were eliminated for selectmen everywhere, not to mention state reps. and senators.
As to the pension system, there are yearly evaluations and bi-yearly audits by PERAC (state agency that oversees pensions).
The state just recently completed a detailed report on the whole issue of unfunded employee health benefits with some very solid recommendations that will for the most part be ignored.
As to a study committee, our unfunded liabilities have been determined and known, and quite frankly publicly discussed for years. People seem to not remember those discussions.
The laws governing retirements systems, pensions, appointments to retirement boards and the like essentially freeze out the town form any independent action.
In reality, the town has extremely limited ability to do anything other than "pay" an amount greater than the mandated minimum required under state law.
I personally don't see what a local study committee would be able to accomplish on this, but if you have an idea I am willing to listen.
It seems to me that the powers to be in the town,employees,pension board an alas town meeting all accepted an amount under PERAC that could have been smaller than voted for.The end result is we pay the higher amount and cant regress to a smaller amount in the future even if the parameters change.The finance board put up a small fight but were convinced it was a losing battle and our employees would be put in jeopardy in the future..
ReplyDeleteI am all for discussion, but your points are wrong. PERAC doesn't tell you what you pay, unless your funding is inadequate to meet the state law mandate.
ReplyDeleteThe current funding schedule was not at any time dictated by PERAC.
As is noted in the newspaper article each fund has a self-imposed deadline. The condition is that the schedule has to pay off the unfunded liabilities by 2040.
You absolutely can in fact revert to a different funding schedule. There are some hoops to jump through, but in can be done however the investment market and a change in legal parameters may very well see such an event happen, and perhaps more than once.
Whether you consider the debate several budgets ago over what the pension appropriation for the then revised funding schedule should be was "a small fight in a losing battle", well that most definitely depends on your own perspective.
From my perspective I would submit that had you really followed that "battle", the original proposal made, and the end result, you wouldn't be making your final statement.