Inside the Special Commission on the Massachusetts Public Retirement Systems

Needham, MA, Town Manager Kate Fitzpatrick shares her views on what the Special Commission accomplished and what surprised her in the process.

Q: What was it like to serve on the commission?

A: It was exciting and very topical because we’ve been pushing for comprehensive reform of the pension system for 10 to 15 years. The legislature had enacted some “reforms” in June because of some recent scandals. This caused confusion about the role of the Commission, which had already been recommended but hadn’t been set.

The Commission began its work after the legislature had essentially enacted “phase 1” reforms. There was great consternation on the part of state and local employees who had always believed that changes to the pension system would be prospective, and some of these changes apply to existing employees. So, I think the Commission started its work with even more scrutiny and suspicion than might otherwise have been the case.

In the final analysis, the Commission believes that the legislature cannot significantly change benefits for existing employees, but it did make some employees feel like they’re under attack.

There was quite a lively discussion and some disagreement among the Commission members about individual recommendations, although I believe that the basic premise – to find a way to create a sustainable system with adequate benefits – was a universal belief. The Commission also unanimously supported the retention of a defined benefit plan and opposed a conversion to Social Security for the state.

In the end, at the recommendation of the chair, the Commission decided to file a report that included a whole host of recommendations, with a supporting rationale for each, rather than seek a vote on individual items.

The outcome is a document that outlines the types of issues the Commonwealth and its subdivisions are facing and the critical need for a sustainable pension system. It’s a terrific outcome, though it would be more terrific to have it acted on.

Q: What’s the status of the commission now?

A: The commission filed its final report in October. The governor filed a bill in January adopting a few of the recommendations, and some that were not in the report. I expect the final legislation will end up being something different.

Q: Were you surprised by anything that came out of it?

A: One item that seemed to take on a life of its own is the concept of implementing a cap on pensions. One of the report’s recommendations is that there should be a cap, but I don’t think we’ve done enough work explaining why there should or should not be a cap on pensions and what it should be. One question is, if there’s a federal cap, why deviate from it?

Another surprising thing is the absolute lack of understanding by taxpayers of how pensions work. It is not widely understood that public employees are not eligible for Social Security, and that they fund a significant share of their pensions themselves. The public doesn’t know the proportionality – for instance, the average pension in Needham is $13,000 per year.

Q: Did you bring back any new insights about employee benefits to Needham?

A: We’re definitely doing more education through public meetings to try to explain the theory behind municipal benefits. And we’re doing more education for our employees on how important a pension is as part of their compensation.

Q: Any other thoughts on the commission?

A: The commission was very interesting because of the people on it. There were a lot of folks who knew a good deal about pension systems, and there were legislators and advocates who felt passionate about the issue from different angles. It was interesting just to document all of the concerns about the system. In my view, the problem to solve is to keep the defined benefit system sustainable. Many of the recommendations, if enacted, will help us make forward progress toward sustainability.

Q: What do you see as the future of public pensions?

A: I think that either the tax-paying public will come to accept the tradeoffs and sacrifices of public service in exchange for adequate pensions and benefits, or there will be a realignment of benefits with what people [in the private sector] are experiencing in their own lives.

Read the commission’s final report.