The legislature today will enact a strong pension reform that will eliminate rules that give some employees, mostly elected officials, special advantages. The bill is the product of a conference committee that has been reconciling House and Senate pension reform bills.
The inventory of specific reforms in the bill dates back to work that the Joint Public Service Committee did last year under the leadership of Rep. Jay Kaufman. Speaker Bob Deleo made pension reform a priority at the outset of his speakership in January, but the Senate actually passed the bill first. Just as the Senate was getting ready to vote its bill, Governor Patrick also jumped in, holding a Sunday press conference to release essentially the same agenda for reform as was already moving in the Senate.
With all three branches working from essentially the same hit list of rule changes, the only issue in real contention was who the changes would apply to: Would the changes apply to new employees only, or would the changes apply to all employees who had not yet retired? Based on prior opinions, a court could conclude that some current employees have earned the right to retire under some of the existing rules.
The final bill applies to all persons who retire after July 1, 2009 and makes only limited transitional exceptions that seem required by law.
The following reforms are implemented with no transitional exceptions:
- Elimination of the rule granting elected officials one year of credit for one day of service in a calendar year.
- Elimination of special termination benefits for elected officials who are voted out.
- Elimination of the “king for a day” rule that encouraged employees to take acting promotions, fake injury, and retire at an elevated pension based on their temporary promotion.
- Restraints on consulting contracts for retirees at authorities like the MBTA
- Administrative control measures — deductions from pension payments for health insurance premiums and other amounts owed back to the pension authority.
The following reforms are implemented with necessary transition rules:
- Narrowing of the definition of compensation for calculating pension entitlements to exclude special or in-kind benefits, whether or not they are taxable.
- Elimination of the ability of certain unpaid or low paid municipal officials to obtain creditable service which would expand their state pension.
- For employees earning in two pension systems, their retirement will be computed by each system separately. Previously, some employees had been able to get a pension based on years of long service in one system applied to a high combined salary received for only a few years.
For these three benefits, the rule changes will not take away previously credited compensation or years of service. Also, the first two changes may be deferred through a present term or contract, but not beyond 2012, and the third does not apply to persons who are already vested in two systems.
My sense, based on many conversations and a reading of the cases, is that some of these changes go far enough to generate law suits from future retirees, and if the changes went much further law suits would likely be successful.
Looking to the next wave of reform, the bill greatly expands the scope of a pension commission created last year — calling for examination of truly radical reforms like moving public employees into the social security system.
Changes to MBTA pensions and benefits will be part of the transportation reform package which will likely emerge soon.
Click here for the full text of the bill, Senate 2079.