Bay State needs to squirrel away more funds for public pensions
Boston — Government officials, especially in Massachusetts, have a penchant for obligating future generations with heavy financial burdens. During the past four decades, this ``fly-now-and-pay-later'' philosophy has left the commonwealth and its municipalities with a wide and ever-deepening chasm in public-employee pension reserves.
If every nickel of this year's $8.9 billion Massachusetts budget were earmarked for this unfunded liability, it still would not be enough.
Obviously, the state could not afford such a bold move. But the commonwealth could do more to squirrel away dollars to close the pension-funding gap. Filling the gap now might prevent taxes from someday soaring, or the possibility of massive cuts in public services.
While nobody seems to know the exact amount that state and local government employee-pension accounts are underfunded, the figure reached $10.9 billion early last year and continues to grow.
This situation, described by some as ``a fiscal time bomb,'' is a major concern on Beacon Hill.
Frank T. Keefe, state secretary for administration and finance, is pushing a proposal that would pour in $51.5 billion in tax money over the next 40 years to liquidate the unfunded liability of all state, local, and teacher retirement systems.
This would involve the voluntary takeover by the commonwealth of both the assets and obligations of municipal retirement accounts.
Getting all of the pension dollars in one place seems to make sense. But it might not have much political appeal, since such a move could reduce the role of people who are now running local public-employee pension programs. While they may be willing to surrender any liabilities, they may not want to give up whatever funds are collected from municipal workers.
The Keefe legislation, now the subject of a series of public hearings across the state, represents a step in the right direction. It provides a blueprint for ensuring the pension money will be there when each public employee retires, instead of waiting to come up with the funds through appropriation.
Bringing state and municipal employees under the social security system is another idea worthy of consideration. Massachusetts is the only state in New England that has not moved in that direction. In Vermont, 92 percent of public employees are under social security, 90 percent in New Hampshire, 74 percent in Rhode Island, 59 percent in Connecticut, and 34 percent in Maine.
If Massachusetts is to retain its 40-year-old contributory pension with adequate funding, a better arrangement (at least from an administrative viewpoint) might include eliminating all local retirement boards. That way every pensioner would be treated equally according to merit, without the local politics rearing its ugly head.
Complete centralization of public-employee pension programs would probably encounter stiff opposition from local government leaders throughout Massachusetts, who could be expected to lean heavily on hometown legislators to defeat such a reform. Yet without administrative control, as well as financial takeover by the state, it is questionable whether the Keefe proposal to infuse tax dollars into retirement-fund reserves will accomplish all that it should.
Despite its reluctance to ruffle sensitive feathers within the governmental power structure, the 145-page Keefe bill does not sidestep the toes of some public-employee unions.
For instance, the report recommends making it tougher for police officers and firefighters who are overweight, or those who smoke, to gain disability pensions on the grounds their physical problems were job-induced. Each employee would be given a year to slim down or give up cigarettes before the proposed change took effect.
Whether the legislation, or a reasonable facsimile, makes it through the lawmaking mill this session could hinge on how much weight Gov. Michael S. Dukakis (D) throws behind it.
Few senators and representatives need to be convinced that there is a critical problem with pension underfunding. The challenge is convincing them that now is the time to address it. If the Keefe measure is too rich for legislator appetites, it is up to the lawmakers to come up with an alternative now -- instead of leaving the financing solution until the ``tomorrow'' that never comes.