Time for Bay State to tackle $10 billion deficit in public pension till
Part of a loaf may not always be better than none - especially when state lawmakers are the cooks and ingredients are apt to get politically tainted. Current legislation to rescue Massachusetts' underfunded pension system for public employees, however, is not one of these exceptions.
Although the bill does not address the question of stricter disability requirements - a broader measure would be needed - the pending proposal seems to be anything but a failure.
Harvard University Prof. John T. Dunlop and others cooked up the complex recipe for closing a $10 billion pension-funding gap. To their credit, they don't intend to walk away now from what may be a more awesome challenge: plugging dollar leaks in the program.
Senate Ways and Means Committee chairman Chester G. Atkins, who prepared the proposal now before the legislature, makes that clear. But any leak-plugging proposal is at least several months away and is likely to be a lot harder to sell than the funding legislation.
Much depends on to what extent the leak-plugging measure embraces more stringent qualifications for disability pensions. State lawmakers, as outwardly committed as they might be to ridding the program of abuses or even of the potential for wasting retiree funds on the underqualified, may be reluctant to go along with remedies lest some friendly political toes get trampled on.
The Public Employee Retirement Administration, created by statute last fall in the wake of widely publicized shortcomings in management of local retirement programs, can go only so far in its regulations. What is needed is more than just stricter standards for determining the eligibility of those seeking early retirement, for whatever reason.
A state or municipal employee, no longer able to perform his duties, for example, need not be turned loose on a pension. In many instances, a shift to another government job, either temporary or permanent, might be in order. To discourage disability retirements, especially those of a questionable nature, the next proposal could bar a public employee from post-retirement work activities which, when added to his or her pension, would exceed the former pay.
Thus, there would be no incentive for a worker to leave public employment before reaching retirement age. This, if nothing else, would save the pension-fund dollars for those who need and earn them.
Political pressures, not only from certain lawmakers of influence but also among municipal officials, could make it impossible to impose such stringent curbs administratively.
Therefore, the best course might be to legislate the long-overdue stricter standards - including those involving disability. Such a reform should embrace stiff penalties for those caught chiseling.
The latter could include permanent forfeiture of all public-employee pension rights. Why should the none-too-plentiful retirement funds be squandered on those who would cheat, regardless of whether they get away with it?
Senator Atkins, Gov. Michael S. Dukakis, and some other prominent state officials appear determined to bring about major improvements, if not an overhaul of the pension system. But without support from outside government, such efforts could drown in the quicksands of inertia or political expediency.
Professor Dunlop, a man of considerable talent and experience in bringing conflicting forces together, already has proved invaluable in shaping the proposal to reduce the huge deficit in the retirement fund.
It is questionable, however, whether the various vested interests - such as public employee unions, those running the various public pension systems, and the political power structure - can get together to jump some of the tough hurdles that could keep unqualified workers off disability retirement rolls.
Those who suggest that systemwide abuses, much-publicized during the past 15 months, are ''isolated cases'' may well be right. Yet the potential for further corruption remains and casts an undeserved cloud of suspicion over hundreds of honest former public employees no longer able to work.
It is for these fully deserving men and women that disability pensions should be provided and protected at whatever cost.
Despite the disappointment of the Massachusetts Taxpayers' Foundation and others that the pending proposal, which cleared the Senate Tuesday, does not face up to the pension disability question, this certainly does not justify delaying House passage.
The proposed $150 million-a-year increased state funding for building adequate state pension reserves, it might be noted, is of itself fairly controversial and may be jeopardized if encumbered with politically unpopular restrictions on ''early retirement.''
The Senate already has deleted from the Atkins plan a proposal that would have used $34 million of the annual yield on cigarette taxes, now committed to transportation projects.
Critics of this phase of the funding plan were apprehensive that this loss of revenue would have forced higher fares on public transit or cuts in service on the Massachusetts Bay Transportation Authority.
A second potential stone in the sneaker of the pending legislation is a provision for increasing the amount new public employees will kick in from their paychecks toward the pension program. The current 7 percent share will become 8 percent after Jan. 1.
State and municipal worker unions are not happy with that arrangement, even though current employees would continue to contribute at today's level. Public employees also dislike a proposal to deny interest on money that they paid into the pension fund if they leave their jobs after but a few years.
Besides assuring state workers that there will be enough dollars in the reserve fund to carry them and their spouses through retirement, the funding measure would be good news to every taxpayer in the commonwealth.
Instead of operating on a pay-as-you-go basis, as has been done for decades, the amount appropriated each year from the commonwealth's general fund to meet pension obligations gradually would lessen. Investment income from accumulated retirement-fund reserves would pick up the slack. And it is likely that the rate of return on some of the independent municipal retirement funds could be substantially greater than it is now.
Professor Dunlop and others spent much time and effort to shape the delicately-balanced proposal. It appears to have merit in that it offers a means for the commonwealth to gradually rid itself of a huge debt, which if continued can only bring higher taxes.
For the future financial well-being of the Bay State this could be the most important matter before the 1983 legislature.