CLT UPDATE
Friday, June 29, 2007
The haves and the have-nots:
Public employees vs. taxpayers
Here’s why the striking Quincy teachers fell far
short in winning their demands last week.
Because we’ve reached a tipping point.
There’s been an attitudinal sea change.
Or, as longtime anti-tax activist Barbara Anderson puts it,
“We’ve reached a perfect storm” where many hard-working, middle-class
taxpayers, the ones who’ve long supported public unions in general and
teachers in particular, have no health insurance at all anymore and
shaky, if any, pensions.
Meanwhile, day after day they read about flagrant public-contract,
-benefit and -pension abuse, from police details to double-dipping to
the out-and-out robbery I’ll detail below. But most everybody gets away
with it. State and local government do nothing to stop it. They just
keep asking the same strapped, hard-working taxpayers to shut up, quit
whining and keep paying because, as Quincy High School teacher Adam
Holtz actually told The Patriot Ledger, “This has always been about the
kids.”
Come on. It’s not about the kids.
To anyone paying attention, a line like that is ridiculous -- insulting,
really.
The Boston Herald
Sunday, June 17, 2007
Hack-ism takes toll on us all
By Margery Eagan
While Lincoln was acquitted Thursday of the federal charges —
and kept his hefty pension — several said the spotlight needs to stay on the
officials who set the groundwork for the largest pension in Plymouth County.
Lincoln was sitting in the defendant's chair in federal court, but others in
city and county government were involved in helping him get the pension and need
to be held accountable, several said.
“People like us would say it was government on trial,” said Barbara Anderson,
executive director of Citizens for Limited Taxation....
Anderson said the Lincoln case highlights abuses in the state pension system.
“This is the issue of the year and he is the poster child for it,” she said.
The Brockton Enterprise
Saturday, June 16, 2007
Lincoln case puts spotlight on system
In reviews of Worcester’s finances before a recent sale of
municipal bonds, Fitch Ratings, Moody’s Investor Services and Standard & Poor’s
made no change in Worcester’s credit ratings. However, all three reiterated
warnings that the ratings could be lowered if the reserves are not restored to a
prudent level.
They also indicated the root of the problem: The growth in “fixed costs,”
notably health-insurance benefits, far outpaces revenue growth. They singled out
for approval City Manager Michael V. O’Brien’s proposal to shift health coverage
for more than 360 city retirees who have conventional insurance plans to
Medicare....
In the current economic climate, the city can ill-afford to continue wasteful
perks and policies of the past.
A Telegram & Gazette editorial
Wednesday, June 20, 2007
Wall Street warning
Wasteful health-insurance policy is unsustainable
As the MBTA negotiates with its 28 unions, watchdogs
yesterday called for an overhaul of its pension plan, which allows employees to
retire after 23 years with full benefits, including free health care for life.
The result is that the MBTA, the transit agency with the highest debt load in
the nation -- one of the reasons it has doubled fares in the last seven years --
can carry retirees for decades, longer even than they worked for the T and paid
into the system....
Asked what was the most taxpayers have ever paid a T retiree, Rivera referred
questions to Steve Crawford, the pension fund’s spokesman, who said that,
although the T is a public agency, its pension fund is private under a law the
state Legislature enacted in the 1940s.
State Senator Mark C. Montigny, a member of the Legislature’s Joint Committee on
Transportation, called that “unacceptable” and “deeply disturbing.”
“Taxpayers have a right to know how their money is spent,” Montigny said.
The Boston Herald
Friday, June 22, 2007
Critics: Overhaul T retirement perks
Oh, to work at the MBTA, where you can retire after 23 years
with full benefits -- and where your pension is both fat and conveniently hidden
from public view.
The commonwealth's entire public employee retirement system is in crying need of
reform, but perhaps nowhere is that more obvious than at the debt-ridden transit
agency that has raised fares three times in the past seven years.
Benefits and retirement costs are quickly bleeding the MBTA bone-dry. The system
is so lopsided that it makes far more sense to put in your 23 years and retire
early than it does to keep working. Heck, there'll still be time to start an
entire second career!
A Boston Herald editorial
Monday, June 25, 2007
T getting crushed by pension burden
A legislative provision is bolstering the pensions of judges
taking early disability retirement, granting them full benefits regardless of
how long they’ve been on the bench, so long as the governor signs off.
The most recent jurist to receive the pension boost is former Cambridge District
Court Judge Marie Jackson, who retired two weeks ago at 59 due to a heart
condition. Gov. Deval Patrick signed off on the special disability retirement,
which boosted her pension by $12,000 to a total of $97,000 a year....
But Governor’s Councilor Mary Ellen Manning said the spirit of the law is being
“perverted” to give judges inflated pensions and an unfair advantage over other
state employees.
“This is an illegitimate loophole for a special class of privileged people,”
Manning said. “The public should be storming the State House with their garden
tools over this.”
The Boston Herald
Friday, June 22, 2007
Disability loophole pads judges’ hefty pension$
The city must reign in the high-flying salaries, generous
benefits and pensions of the Hub’s teachers, firefighters and cops -- many
making more than $100,000 a year -- or else gird for a financial crisis, a
Boston business watchdog group warned yesterday.
“It is a higher level of benefits than most of the taxpayers in this city
receive and it is costing a price,” said Sam Tyler, president of the Boston
Municipal Research Bureau, which released a study yesterday on salaries and
compensation.
The Boston Herald
Tuesday, June 26, 2007
Expert says Hub must curb pay, perk$
Leaders of a key legislative committee have reached agreement
on another portion of Governor Deval Patrick's municipal relief plan, which
would require underperforming local pension funds to join with the state's
highly successful pension system....
Last week, the House passed legislation that would let communities save money by
buying health insurance through the program the state uses to buy insurance for
its employees....
If the bill passed, 25 public pension systems would be subsumed by the state
fund, based on the most recent data available, according to the committee.
The Boston Globe
Tuesday, June 25, 2007
Mass. House to take up pension funds bill
For the current fiscal year, state education aid to cities
and towns went up $217 million. Despite the substantial jump, pay increases and
the rise in nondiscretionary spending outpace revenue growth in many
districts....
Unlike in the private sector, where employees generally pay 15 to 30 percent of
health insurance premiums, school districts usually cover at least 80
percent....
Even though GIC promises better coverage at a lower cost, many public employee
unions are loath to give up the right to bargain employer/employee split. In his
Municipal Partnership proposal, Governor Deval Patrick gives municipalities the
option of joining GIC, but only after approval by 70 percent of the local union
committee.
The Boston Globe
Tuesday, June 25, 2007
An avoidable teachers strike
By Jim Stergios and Allison Ledger Fraser
In the interest of getting a bill passed, the House has set
the bar slightly lower than Gov. Deval Patrick did when he proposed this reform.
We’re not holding our breath waiting for lower property tax bills because of
it....
Meanwhile, a vote in the House last week may well lead to health care savings
for cities and towns -- $120 million to $180 million, by House estimates.
Nothing to sneeze at.
But the bar for local union approval of enrollment in the Group Insurance
Commission is still sky-high. And there are no guarantees that communities will
use that savings to lower property taxes....
They reflect a balance of the pressures being brought to bear by municipal
officials, union leaders and property owners.
But unless they are eventually made stronger, they won’t deliver the level of
“relief” that these communities -- these taxpayers -- desperately need.
A Boston Herald editorial
Wednesday, June 27, 2007
Reforms close, not close enough
[Michael J. Donoghue] has not only parlayed longstanding
political connections, but also rewarded old campaign contributors by handing
them lucrative fund management contracts and legal work.
But the financial results of the $400 million county pension fund that Mr.
Donoghue has overseen since 1978, as chairman and CEO of the Worcester Regional
Retirement Board, have fallen far short of the level that would qualify him as a
savvy market pro.
The fund, which invests the assets of 50 Worcester County towns and another 46
school districts and housing and water authorities, has struggled under his
stewardship. Over the last five years, only six of the state’s 107 public
pension funds have performed worse....
Mr. Donoghue, who went on paid sick leave from his $133,500-a-year job on June
5, has fiercely opposed the governor’s PRIT takeover legislation, which state
lawmakers may vote on as soon as this week.
The Telegram & Gazette
Sunday, June 24, 2007
Outperformed
Over last five years Worcester Regional Pension Fund
had 7th lowest performance in state
As a state takeover of his underperforming regional
retirement fund appears close, Michael J. Donoghue will retire next month after
nearly 30 years running the county pension fund both as chairman and as elected
county treasurer....
With more than 30 years of public employment, Mr. Donoghue apparently will be
eligible for the maximum retirement rate of 80 percent of his salary and will
receive an annual pension of $106,800. As of December, he had accrued 51 days of
unused vacation time that he is entitled to under his contract upon retirement.
He can also be paid for 30 percent of his accrued sick time, which totaled 138
days at the end of last year, according to his contract.
The Telegram & Gazette
Wednesday, June 27, 2007
Donoghue elects to retire now
Veteran treasurer bows to state takeover
Facing charges it has shortchanged programs to save kids from
street violence, the Menino administration is doling out $100,000-plus
taxpayer-funded salaries to a whopping 187 city workers, a Herald review has
found.
From department heads to managers to a surprising number of secretaries and
“executive assistants,” the six-figure paychecks are handed out as Boston reels
from a violence spree that has city councilors demanding more youth programs.
The Boston Herald
Friday, June 29, 2007
Many Boston workers see $100G
Chip Ford's CLT Commentary
"Because we’ve reached a tipping point," Boston
Herald columnist Margery Eagan explained it. "There’s been an attitudinal
sea change."
And yet "high-flying salaries, generous benefits and
pensions" continue, along with inevitable budget crises both state and
municipal and constant calls for higher taxes everywhere.
There are two worlds out there, two classes, and the
divide is widening. First and foremost is the class which was once
called "public servants," now termed "public employees"; best
described as "hacks" since they live at the public trough primarily to
benefit themselves. To perpetuate increasing benefits they
must continually feed more voraciously upon the other class, the
under-class: Taxpayers, who, in the eyes of public employee
unions, exist primarily if not solely to feed upon, keeping the
hack-class fat and happy.
Once upon a time public servants worked for the
benefit of society as a whole and its citizenry. They performed what was
once considered an honorable profession called "public
service." Today, what the hack-class does is better termed
"self-service," helping themselves to more and more of the other class's
property. When they can't cajole -- now called "negotiate" -- they
extort, today exercised through any means necessary such as illegal strikes. One such
act of flagrant extortion was
committed recently in Quincy by its teachers union.
State and local teachers unions, though not alone
elbowing their way to the public trough, are arguably the most
rapacious. While they decry "growing class sizes" and deviously
claim their demands are made only "for the children," their insatiable
greed drains public treasuries year after year. The unions either
fail to recognize that revenue funds are finite -- if teachers
individually profit, then spending cuts must come from elsewhere -- or
they simply don't care where the cuts are made so long as they get
theirs. Even if that entails thinning their herd, losing some
teachers to those cuts -- gasp, increasing class size -- just so the
remaining herd gets fatter.
But teachers unions are not alone. The culture
of "public service" has been hijacked by "public employees" who feel
entitled to an ever-improving lifestyle to which all hacks have become
accustomed, at taxpayers' expense. While the economy may rise and
fall, effecting those who pay for the hack lifestyle, nothing
affects the constant, expected rise of public employee salaries and
benefits.
Indeed the tipping point has finally been reached.
In a year of a likely record-breaking number of Proposition 2½
overrides, some 60 percent are going down in flames. Most
taxpayers have hit the wall, the breaking point. In growing
numbers they are turning out and simply refusing to be extorted any
more, standing up to the bullying class. The hack-class's charade
has worn out, at least is wearing mighty thin and threadbare.
This is a start, but taxpayers have a long way to go
-- and they still have some loose change in their pockets to be grabbed.
An entire generation of inbred political culture of exceptional entitlement on every level must be
reversed. Hacks must begin to recognize that they are at most employees
serving at the will of their employers, and that those employers have
had enough of their selfish expectations and demands. Only then can we
taxpayers hope to restore what was once called public service.
In the meantime, can't we at least have a semblance of
equality?
The growing awakening by the oppressed class must continue by starving the beast of government.
"No new taxes!"
 |
|
Chip Ford |
The Boston Herald
Sunday, June 17, 2007
Hack-ism takes toll on us all
By Margery Eagan
Here’s why the striking Quincy teachers fell far short in winning their
demands last week.
Because we’ve reached a tipping point.
There’s been an attitudinal sea change.
Or, as longtime anti-tax activist Barbara Anderson puts it,
“We’ve reached a perfect storm” where many hard-working, middle-class
taxpayers, the ones who’ve long supported public unions in general and
teachers in particular, have no health insurance at all anymore and
shaky, if any, pensions.
Meanwhile, day after day they read about flagrant public-contract,
-benefit and -pension abuse, from police details to double-dipping to
the out-and-out robbery I’ll detail below. But most everybody gets away
with it. State and local government do nothing to stop it. They just
keep asking the same strapped, hard-working taxpayers to shut up, quit
whining and keep paying because, as Quincy High School teacher Adam
Holtz actually told The Patriot Ledger, “This has always been about the
kids.”
Come on. It’s not about the kids.
To anyone paying attention, a line like that is ridiculous -- insulting,
really.
What we have here is a poisoned, cynical atmosphere: When the most
blatant abusers are almost never held accountable, you lose support even
for legitimate inequities.
Here’s what Elke Baum, 63, wrote to the Ledger this week about her own
inability to pay higher property taxes, in part because she can’t get
health insurance even working full time.
“I left a company after 16 years’ employment to first take care of my
father’s Alzheimer’s and lung cancer; then my mother’s massive strokes,
diabetes and dementia. First, there was Cobra of $350 a month. Now it’s
$875.68 a month.”
Here’s what led the news Friday, the day the teachers returned to school
so cash-strapped parents could finally get back to their own jobs: the
judicial escape of retired Brockton police officer Charlie Lincoln, the
poster boy for public pension abuse.
Lincoln will collect nearly $140,000, for the rest of his life, from two
public jobs he worked, supposedly full time, at the same time. How did
he manage that? By calling in sick 251 days in three years. According to
a report by inspector general Gregory Sullivan, on the 148 days Lincoln
took sick leave from Brockton Police, he worked a full shift at the
Plymouth County Sheriff’s Office.
But it gets worse: A jury acquitted Lincoln of fraud last week after
other Brockton police officers testified at trial that it was usual
practice for police to use accumulated sick days as personal days. In
other words, it’s common for Brockton police to call in sick when they
aren’t. And if you’re out working a second job at the same time, working
toward a second pension taxpayers will have to fund, so what? If
everybody else does it, why not Lincoln as well?
You know there was huge frenzy this week on Beacon Hill over gay
marriage. Each side was worked to a fever pitch. Wouldn’t it be swell if
we could work ourselves into the same sort of frenzy over something
that’s crippling us: a full $3 billion of the state’s $13 billion in
unfunded pension liabilities is due to abuses overlooked and sweetheart
deals negotiated by the very same cities and towns that are always
crying poor mouth.
The Pioneer Institute, a local think tank, estimates that the annual
cost to Massachusetts taxpayers is $125 million, an awful lot of money
we could throw at the children we’re supposedly so worried about.
If it’s really about the children, then the governor, the Legislature,
the mayors and selectmen should find some political courage and fix this
mess.
Margery Eagan’s radio show airs at noon on 96.9 FM-Talk.
The Brockton Enterprise
Saturday, June 16, 2007
Lincoln case puts spotlight on system
By Maureen Boyle
Seven cardboard boxes labeled “Charles Lincoln” lined the table behind
the federal prosecutors for days in Courtroom 18 at U.S. District Court
in Boston.
The boxes, filled with thousands of pages of paperwork, detailed the
federal mail-fraud case against the 65-year-old former Brockton police
lieutenant who garnered a $140,000 yearly pension by holding two
full-time government jobs.
While Lincoln was acquitted Thursday of the federal charges — and kept
his hefty pension — several said the spotlight needs to stay on the
officials who set the groundwork for the largest pension in Plymouth
County.
Lincoln was sitting in the defendant's chair in federal court, but
others in city and county government were involved in helping him get
the pension and need to be held accountable, several said.
“People like us would say it was government on trial,” said Barbara
Anderson, executive director of Citizens for Limited Taxation.
Brockton officials allowed Lincoln to use up his sick time to work at
the jail — and then-Plymouth County Sheriff Joseph McDonough hired
Lincoln knowing his former campaign aide was still a Brockton police
officer, said James McDonald, the current sheriff.
“I think very clearly, they all knew what he was up to and looked the
other way,” McDonald said.
That left the taxpayers to foot the bill, several said.
“I don't think the city of Brockton was well served nor was Plymouth
County,” said Steve Poftak, research director for the Pioneer Institute,
a Boston nonpartisan think tank.
The case has spurred two civil lawsuits — one by Brockton, the other by
Plymouth County — to recoup part of the pension and already has led to
changes in the Brockton Police Department on sick time use.
“I don't think we will see another case like this,” Police Chief William
Conlon said.
Brockton police are now cracking down on the use of sick time — and
keeping watch on how much time officers nearing retirement take, Conlon
said.
In the past, older officers would “burn up” sick time in their final
years on the force, a practice several said had gone on for decades.
“It is just an old, antiquated practice that has been very common and
widespread,” Conlon said. “It was very common and I don't think that is
something that is unique to the Brockton Police Department. You will
probably find it in many departments in the state.”
McDonald said he believes the jury was torn during deliberations.
“The jury was out for so long, I believe, because they knew something
was wrong,” he said. “Just because everyone else was doing it doesn't
make it right.”
U.S. Attorney Michael Sullivan said Lincoln took advantage of an
opportunity — and he hopes the case is a lesson to public officials that
people are watching what they are doing.
“This was an important case to bring,” Sullivan said.
Prosecutors alleged Lincoln called in sick to his night police job in
Brockton to work as director of security at the Plymouth County jail by
day for three years to garner the record pension. Two mailings involving
the pension allowed federal prosecutors to press the case in U.S.
District Court.
But calling in sick isn't a federal crime, U.S. District Court judge
William Young had told the jury. Neither is having two jobs, he said.
What the government had to prove was that Lincoln developed an illegal
scheme to deprive his employers of money or property — and used the
mails to do it.
Lincoln repeatedly said he did nothing illegal in working two jobs and
none of his superiors complained when he was doing it.
His lawyer, Thomas Drechsler, said Lincoln was only doing what the
pension system allowed.
You might not like it, but it wasn't illegal, Drechsler had told the
jury.
Anderson said the Lincoln case highlights abuses in the state pension
system.
“This is the issue of the year and he is the poster child for it,” she
said.
It also shakes public confidence in government.
“It causes people to breathe a great deal of cynicism in the system,”
Poftak said.
McDonald said the issue could have been stopped at the start.
“If the former sheriff had given a job contingent on Charlie Lincoln
leaving his first job, there wouldn't have been a problem,” he said.
“They may have dodged a bullet here but it is not open season on the
pension system,” McDonald said. “People are looking, the issue is now in
the open.”
The Telegram & Gazette
Wednesday, June 20, 2007
A Telegram & Gazette editorial
Wall Street warning
Wasteful health-insurance policy is unsustainable
The City Hall rally to promote Gov. Deval L. Patrick’s Municipal
Partnership Act got top billing on page one yesterday, but ominous
warnings from Wall Street reported in a story that ran below the fold
could have as great an impact on the city’s fiscal future as
local-option taxes.
In reviews of Worcester’s finances before a recent sale of municipal
bonds, Fitch Ratings, Moody’s Investor Services and Standard & Poor’s
made no change in Worcester’s credit ratings. However, all three
reiterated warnings that the ratings could be lowered if the reserves
are not restored to a prudent level.
They also indicated the root of the problem: The growth in “fixed
costs,” notably health-insurance benefits, far outpaces revenue growth.
They singled out for approval City Manager Michael V. O’Brien’s proposal
to shift health coverage for more than 360 city retirees who have
conventional insurance plans to Medicare. That would yield major annual
savings because a significant part of the cost of coverage would shift
to the federal program.
The change is both reasonable and fair. About 2,200 of roughly 2,700
Worcester retirees already have Medicare plans. Moreover, Chapter 32B,
Section 18, the local-option state law authorizing the shift, requires
that the Medicare coverage must be “of comparable actuarial value” to
their conventional insurance plans.
When Wall Street talks about lowering bond ratings, prudent communities
listen. Dropping Worcester’s favorable rating to below investment grade
would not prevent the city from securing loans, but it would mean the
city would pay a huge penalty in higher interest rates. Even on
relatively small bond issues, the difference could be hundreds of
thousands of dollars and, in major bond issues, millions.
In the current economic climate, the city can ill-afford to continue
wasteful perks and policies of the past.
The Boston Herald
Friday, June 22, 2007
Critics: Overhaul T retirement perks
By Marie Szaniszlo
As the MBTA negotiates with its 28 unions, watchdogs yesterday called
for an overhaul of its pension plan, which allows employees to retire
after 23 years with full benefits, including free health care for life.
The result is that the MBTA, the transit agency with the highest debt
load in the nation -- one of the reasons it has doubled fares in the
last seven years -- can carry retirees for decades, longer even than
they worked for the T and paid into the system.
“No one is saying T employees shouldn’t get a generous benefit package,”
said Michael Widmer, a member of the Massachusetts Transportation
Finance Commission’s subcommittee on the MBTA. “The question is whether
an agency that is $5.1 billion in debt can continue to pay benefits that
far exceed the average worker’s and still remain solvent, and the answer
is no.”
Most pension plans permit employees to retire before age 65, but with
reduced benefits. T employees may retire after 23 years and collect 57
percent of the average of their highest three earnings years state
tax-free.
The Transportation Finance Commission called the benefits “one of the
key cost drivers facing the MBTA,” which has raised fares three times in
the last seven years.
“The retirement benefits package makes it more attractive to retire
early than to stay employed,” the commission concluded in its report,
which noted that nearly one-third of new retirees over the last three
years were under 55.
“It is striking that retirees account for almost half of the MBTA’s
health-care costs,” the commission noted, “and even more striking that
almost two-thirds of the MBTA’s retiree health-care costs are spent on
retirees who are under age 65.”
“These issues are currently the subject of on-going contract
negotiations between MBTA labor and management,” T spokeswoman Lydia
Rivera said yesterday. “Both parties have agreed not to discuss these
issues outside of negotiations.”
Asked what was the most taxpayers have ever paid a T retiree, Rivera
referred questions to Steve Crawford, the pension fund’s spokesman, who
said that, although the T is a public agency, its pension fund is
private under a law the state Legislature enacted in the 1940s.
State Senator Mark C. Montigny, a member of the Legislature’s Joint
Committee on Transportation, called that “unacceptable” and “deeply
disturbing.”
“Taxpayers have a right to know how their money is spent,” Montigny
said.
The Boston Herald
Monday, June 25, 2007
A Boston Herald editorial
T getting crushed by pension burden
Oh, to work at the MBTA, where you can retire after 23 years with full
benefits -- and where your pension is both fat and conveniently hidden
from public view.
The commonwealth's entire public employee retirement system is in crying
need of reform, but perhaps nowhere is that more obvious than at the
debt-ridden transit agency that has raised fares three times in the past
seven years.
Benefits and retirement costs are quickly bleeding the MBTA bone-dry.
The system is so lopsided that it makes far more sense to put in your 23
years and retire early than it does to keep working. Heck, there'll
still be time to start an entire second career!
According to the Transportation Finance Commission, fully one-third of
new retirees over the last three years were under age 55. Nearly one
half of the T's health care costs are gobbled up by retirees (health
care is 100 percent covered after retirement).
Nice work if you can get it.
"No one is saying T employees shouldn't get a generous benefit package,"
Michael Widmer, a member of the commission's subcommittee on T finances,
told the Herald last week. "The question is whether an agency that is
$5.1 billion in debt can continue to pay benefits that far exceed the
average worker's and still remain solvent."
Asked and answered. In a word -- "no."
This is not a system or a problem of MBTA General Manager Dan Grabauskas'
making. But he's saddled with the responsibility of negotiating changes
with the T's powerful unions.
It'd be a lot easier to make a case for reform if we could publicize
some of the more generous deals being handed out to these youthful
retirees. Only thanks to a quirk in state law, the T's pension fund is
private.
Sen. Mark Montigny (D-New Bedford) dubs that unacceptable. "Taxpayers
have a right to know how their money is spent," he said.
A fine sentiment. But far more helpful would be if Montigny and his
colleagues would put thought into action, challenge the unions and
spearhead overdue reforms. Those who rely on public transit are counting
on it.
The Boston Herald
Friday, June 22, 2007
Disability loophole pads judges’ hefty pension$
By Dave Wedge
A legislative provision is bolstering the pensions of judges taking
early disability retirement, granting them full benefits regardless of
how long they’ve been on the bench, so long as the governor signs off.
The most recent jurist to receive the pension boost is former Cambridge
District Court Judge Marie Jackson, who retired two weeks ago at 59 due
to a heart condition. Gov. Deval Patrick signed off on the special
disability retirement, which boosted her pension by $12,000 to a total
of $97,000 a year.
“After reviewing the request and receiving recommendations from
physician and the court administrator, the Governor’s Chief Legal
Counsel found that the facts supported Judge Jackson’s being retired due
to physical disability and submitted the recommendation to the
Governor’s Council, which approved the request,” the governor’s office
said in a statement.
Jackson’s attorney, Catherine White, said the judge took advantage of
the best available pension option.
“The regular disability retirement is dependent on a lot of factors,”
White said. “This constitutional retirement is an option given to the
governor. It seemed to be the appropriate section to use.”
But Governor’s Councilor Mary Ellen Manning said the spirit of the law
is being “perverted” to give judges inflated pensions and an unfair
advantage over other state employees.
“This is an illegitimate loophole for a special class of privileged
people,” Manning said. “The public should be storming the State House
with their garden tools over this.”
The involuntary disability provision, which allows ill judges to bypass
regular state rules and retire with full pensions, has been used 13
times since 1991, including four times each by former Govs. William F.
Weld and Paul Cellucci, twice by former acting Gov. Jane M. Swift and
three times by ex-Gov. Mitt Romney.
In one case, Boston Municipal Court Judge Peter J. Donovan saw his
pension doubled from roughly $40,000 to $80,400 per year with Cellucci’s
approval. Governor’s Council Records state that Donovan suffered from
“obsessive compulsive disorder” marked by “hours of hand washing.”
Two other judges, now deceased, were granted pensions under the system
as well. Suffolk Juvenile Judge June Miles and Superior Court Judge
Thomas J. Curley were retired under the special provision.
The measure was written into the state constitution in the early 1900s
and was designed to allow governors to force problem judges to retire.
Manning argues that judges asking the governor for disability violates
the law.
“It’s clearly wrong,” she said. “What I want to see happen is for the
judges to get the pensions that they have earned. I want the judges to
be treated like every other disabled pensioner.”
The Boston Herald
Tuesday, June 26, 2007
Expert says Hub must curb pay, perk$
By Jessica Fargen
Boston Herald Health & Medical Reporter
The city must reign in the high-flying salaries, generous benefits and
pensions of the Hub’s teachers, firefighters and cops -- many making
more than $100,000 a year -- or else gird for a financial crisis, a
Boston business watchdog group warned yesterday.
“It is a higher level of benefits than most of the taxpayers in this
city receive and it is costing a price,” said Sam Tyler, president of
the Boston Municipal Research Bureau, which released a study yesterday
on salaries and compensation. “Soon we are going to need to re-evaluate
what the city can do.”
Nearly two-thirds of cops and 25 percent of Hub firefighters earned more
than $100,000 in 2006 and Boston’s average teacher salary is the highest
in the state, according to the study, which called the city of Boston
“very competitive in today’s labor market.”
Union officials blasted the study, saying that pay raises and health
insurance benefits are hard-fought battles.
The bureau analyzed the city’s health insurance contribution, overtime,
details, earnings and clothing allowances and found average
compensations for the following jobs:
Patrol officer, $112,717
Firefighter, $96,165
Teacher, $79,022
Middle managers, $73,517
Pension costs were not factored in this analysis, but Tyler warned that
without pension reform and changes in union contracts, residents will
see cutbacks.
“All that is pointing to higher spending for personnel, which could have
an impact on the city’s ability to provide services at the levels it
wants to,” he said.
Local union leaders lashed out at the report, calling it unfair and an
“insult.”
“I consider it an attack on the middle class,” said Ed Kelly, president
of Boston Firefighters Local 718. “It takes a jab at what was hard
fought over a period of many years.”
Richard Stutman, president of the Boston Teacher’s Union, said the
city’s wages help the city retain and recruit teachers. The average
tenure of a city teacher is 15 years, according to the report.
“Boston educators work in some of the most difficult public schools in
the state and live in one of the most expensive cities in the country,”
he said in a statement.
A police union representative could not be reached last night.
The report can be viewed at www.bmrb.org.
The Boston Globe
Tuesday, June 25, 2007
Mass. House to take up pension funds bill
Some local assets would join state's
By Lisa Wangsness
Leaders of a key legislative committee have reached agreement on another
portion of Governor Deval Patrick's municipal relief plan, which would
require underperforming local pension funds to join with the state's
highly successful pension system.
The full House is expected to take up the bill tomorrow, and the Senate
is likely to consider it within the next two weeks.
If it passes, then the assets of about two dozen local pension funds
would be turned over for management by the state's pension system.
The difference between what those communities' pension funds earned over
the last decade and what they would have earned if they had been
invested with the state is at least $700 million, according to the Joint
Committee on Public Service.
"We thank the House and Senate leadership for taking this step to help
our cash-strapped cities and towns relieve the pressure on the property
tax," the governor's office said in a statement last night.
"Passage of this piece of the governor's municipal partnership act will
yield significant savings for taxpayers and assure retirees get the
benefits they deserve," the statement said.
The pension bill is part of a sweeping package proposed by Patrick
earlier this year to help communities save money on pensions and health
insurance.
It is also intended to reduce their dependence on residential property
taxes by allowing them to raise small levies on rooms and meals and by
ending a property tax exemption for telecommunications companies.
Last week, the House passed legislation that would let communities save
money by buying health insurance through the program the state uses to
buy insurance for its employees.
The fate of another proposal, which would end a property tax exemption
on telecommunications equipment, remains unclear, while Patrick's
proposal to allow localities to impose a local meals tax and increase
the local hotel tax appears to be stalled.
Patrick's original proposal would have required local pension funds to
transfer their assets to the state pension system if they were less than
80 percent funded and their performance lagged at least 2.25 percentage
points behind the state fund's annualized return during the previous
five years.
Between 2001 and 2005, the state fund's annualized rate of return was
7.04 percent.
According to the administration, the proposal would have dissolved about
one-third of the state's 107 public pension funds into the state fund,
including the system overseen by the Massachusetts Turnpike Authority.
The committee's version would set a slightly lower bar.
It would require the state pension fund to manage all public funds that
are less than 65 percent funded, and whose annualized performance has
been at least 2 percentage points lower than the state's over a 10-year
period.
According to the committee, the state pension fund's annualized rate of
return over the last decade was 10.51 percent.
If the bill passed, 25 public pension systems would be subsumed by the
state fund, based on the most recent data available, according to the
committee.
They include the funds run by Fall River, Springfield, Pittsfield,
Plymouth, Lynn, and Lawrence, as well as six of the state's 14 counties.
The Boston Globe
Tuesday, June 25, 2007
An avoidable teachers strike
By Jim Stergios and Allison Ledger Fraser
The settlement of the recent Quincy teachers strike has everyone
involved breathing a sigh of relief. But once the relief subsides, we
should turn our attention to just how easily avoidable the episode was.
As in many municipal contract negotiations, the dispute centered on how
to split the rapidly escalating cost of health insurance premiums
between the city and its teachers. Quincy teachers currently pay 10
percent of health insurance costs. The school district eventually
succeeded at bumping that up to 20 percent, to be phased in over three
years.
But if Quincy and other Massachusetts municipalities purchased health
insurance through the Commonwealth's Group Insurance Commission, they
would save hundreds of millions of dollars that could be redirected into
classrooms and other local services, and employees would get better
coverage. For the current fiscal year, state education aid to cities and
towns went up $217 million. Despite the substantial jump, pay increases
and the rise in nondiscretionary spending outpace revenue growth in many
districts.
The biggest driver of cost increases is health insurance. Sam Tyler of
Boston Municipal Research Bureau estimates that the city's healthcare
costs rose 92 percent over the last six years, compared with a 61
percent jump in state costs over the same period. Between 2001 and 2005,
the Massachusetts Taxpayers Foundation found that municipal health
insurance costs rose at nearly double the rate of state costs.
The reason is simple. About 74,000 teachers are split into nearly 350
school districts. Meanwhile, 270,000 people get their health insurance
through the Group Insurance Commission.
It doesn't take an economist to know who has more bargaining power with
insurance carriers. In fiscal 2006, the Commonwealth paid about $3,800
for each GIC member. Compare that to the nearly $22,000 Nantucket paid
for each school employee.
Unlike in the private sector, where employees generally pay 15 to 30
percent of health insurance premiums, school districts usually cover at
least 80 percent. But even towns such as Winthrop and Westport, which
have negotiated a 50-50 split, paid about $9,000 per employee last year.
If Boston had purchased health insurance for its teachers through GIC in
fiscal 2006, it would have saved more than $45 million. Lawrence,
Worcester, and Springfield are among the cities in which savings would
have topped $10 million. Even municipalities such as Marlborough and
Weston could have saved over $3 million each. The savings don't come at
the cost of quality coverage. In fact, smaller districts often have just
one or two health plans, while GIC offers a dozen.
Even though GIC promises better coverage at a lower cost, many public
employee unions are loath to give up the right to bargain
employer/employee split. In his Municipal Partnership proposal, Governor
Deval Patrick gives municipalities the option of joining GIC, but only
after approval by 70 percent of the local union committee.
Pensions are not a part of teacher contract negotiations and health
insurance premiums shouldn't be either. The additional hundreds of
millions of dollars unnecessarily spent on premiums represent funds that
are sorely needed in the classroom. For example, the Department of
Education asked for $30 million to turn around habitually failing
schools this year. Like last year, they will likely have to settle for
just a fraction of that.
In addition to Quincy, health insurance was also a key issue in recent
negotiations in Worcester and Springfield. In Worcester, where nine of
the city's 47 schools have been designated as underperforming, teachers
worked without a contract for a year before an agreement was reached in
June 2006. Implementation of critical contract provisions regarding
class size, more common planning time for teachers and flexibility to
fix underperforming schools was needlessly delayed during that year due
to the disagreement over health costs.
The misfortune of the recent Quincy teacher strike is magnified by how
easily it could have been avoided. But perhaps we will look back on it
as the point when political leaders prioritized education reform by
taking health insurance off the bargaining table and mandating that
cities and towns join the Group Insurance Commission.
Jim Stergios is executive director of
Pioneer
Institute, a Massachusetts public policy think tank. Alison Ledger
Fraser directs the Great Schools Campaign at the
Mass Insight
Education Research Institute.
The Boston Herald
Wednesday, June 27, 2007
A Boston Herald editorial
Reforms close, not close enough
OK, so we understand the concept of “baby steps.”
And make no mistake -- we’re pleased that lawmakers are taking action on
two municipal reforms that will provide some savings to cities and towns
-- and maybe, eventually, to property owners.
We just can’t help wishing they would do more.
The House today is expected to approve a change to have the state
pension fund absorb about two dozen smaller, underperforming municipal
funds, potentially saving those communities millions.
In the interest of getting a bill passed, the House has set the bar
slightly lower than Gov. Deval Patrick did when he proposed this reform.
We’re not holding our breath waiting for lower property tax bills
because of it.
Meanwhile, a vote in the House last week may well lead to health care
savings for cities and towns -- $120 million to $180 million, by House
estimates. Nothing to sneeze at.
But the bar for local union approval of enrollment in the Group
Insurance Commission is still sky-high. And there are no guarantees that
communities will use that savings to lower property taxes.
In other words, the taxpayers of Stoneham ought not get their hopes up
that the latest action on Beacon Hill will bring forth a wave of
unfettered dollars that might help prop up their soon-to-be-cancelled
athletic program. Same goes for officials in other communities that find
themselves struggling mightily under the burden of health care and
pension obligations.
Yes, the votes in the House (and, soon, the Senate) reflect the most
sensible provisions in Patrick’s Municipal Relief Act. They reflect a
balance of the pressures being brought to bear by municipal officials,
union leaders and property owners.
But unless they are eventually made stronger, they won’t deliver the
level of “relief” that these communities -- these taxpayers --
desperately need.
The Telegram & Gazette
Sunday, June 24, 2007
Outperformed
Over last five years Worcester Regional Pension Fund
had 7th lowest performance in state
By Shaun Sutner
Michael J. Donoghue has developed an image over the years as a
market-savvy investment professional.
He has presided over investment symposiums, advised politicians, and
traveled, all expenses paid, to scenic conference locations in Alaska,
New Orleans, Washington and Cape Cod.
And like many successful investment managers, along the way the
63-year-old former county treasurer and Worcester city councilor has
played a lot of golf, building what is said to be a 12 handicap.
He has not only parlayed longstanding political connections, but also
rewarded old campaign contributors by handing them lucrative fund
management contracts and legal work.
But the financial results of the $400 million county pension fund that
Mr. Donoghue has overseen since 1978, as chairman and CEO of the
Worcester Regional Retirement Board, have fallen far short of the level
that would qualify him as a savvy market pro.
The fund, which invests the assets of 50 Worcester County towns and
another 46 school districts and housing and water authorities, has
struggled under his stewardship. Over the last five years, only six of
the state’s 107 public pension funds have performed worse. Last year,
which was one of modest success for the fund, it ranked 73rd among all
the funds.
Things have gone so badly that a fellow Democrat, Gov. Deval L. Patrick,
whose campaign Mr. Donoghue backed last year, now is poised to seize
control of his fund and other underperforming local funds and merge them
with the $50 billion state public employee pension fund, called the
Public Retirement Investment Trust, or PRIT.
Mr. Donoghue, who went on paid sick leave from his $133,500-a-year job
on June 5, has fiercely opposed the governor’s PRIT takeover
legislation, which state lawmakers may vote on as soon as this week.
At the last minute, the bill is still evolving in committee, but it
appears it would capture the Worcester Regional Pension Fund. In the
meantime, with Mr. Donoghue gone, his board has signaled that it may be
ready to voluntarily surrender the fund’s assets to state management; it
plans to take up the matter for the first time at its meeting Tuesday
morning.
Until lately, the regional fund has been undiversified and heavily
invested in low-yielding bond funds and domestic equities. More
successful counterparts have spread their assets around hedge and real
estate funds, international stocks and timber. The Worcester board has
traditionally been slow to change its asset allocation, and it has often
stuck with underperforming managers, even after years of bad returns.
The board has turned in some of the worst investment returns of all of
the state’s 107 public employee pension funds since 1985, when the
Legislature mandated that all pension funds be fully funded within 45
years.
That sub-par performance has cost the members of the regional retirement
system at least $80 million over the last decade, according to Ken Ardon,
a Salem State College economics professor who has studied the state’s
pension systems and wrote a white paper on them for the Pioneer
Institute in Boston. Mr. Ardon said his calculation is on the low side
because it does not factor in the compounding effect of the foregone
earnings.
Mr. Donoghue refused multiple requests to be interviewed for this story.
He was, however, spotted teeing off at the Worcester Green Hill
municipal golf course the morning after the board’s lawyer, Demetrios M.
Moschos, announced that he was taking a leave for health reasons. Mr.
Donoghue himself described the health problem as high blood pressure.
In his absence, his board members and Mr. Moschos have defended his
management of the fund, which over one-year, five-year, 10-year and
22-year periods has registered returns that are among the lowest of all
Massachusetts pension funds.
“The board feels he is qualified and that he has done an excellent job,”
said Roger R. Dubois, a retired Dudley building inspector who has been
acting chairman since Mr. Donoghue went on medical leave.
The board members say the fund has usually exceeded its target return of
8.5 percent. And they claim it has lower costs per member than about 10
similar regional funds. They also complained that because of the fund’s
relatively small size, it has been prevented by the Public Employee
Retirement Administration Commission from taking certain more aggressive
positions.
“The board has made a conscious effort to be conservative,” Mr. Dubois
said. “We’re not the state. They don’t have to answer to anyone. We
chose to be conservative here.”
But that approach has failed when investment returns are measured
against other public pension funds.
Conservative investing is generally viewed in financial circles as
best-suited to individuals at the end of their careers who need to
safeguard assets and are not as concerned with growth, as well as to
pension funds that are close to fully funded and do not need fast-rising
returns to shore up their unfunded liability.
With a funded ratio of 63.5 percent (below the median of about 70
percent for all Massachusetts pension funds), Mr. Donoghue’s fund should
have invested aggressively if it wanted to lessen the toll on local
taxpayers, who have to make up the difference for poor returns,
according to investment experts interviewed for this story.
PERAC, which loosely oversees local funds, commented on the wisdom of
conservative pension fund investing in its recently released 2006
Investment Report.
“Two of these systems justify their conservative asset allocations by
having high funded ratios, but others have no such rationale,” the PERAC
report states.
Not only has the professionally managed state fund outperformed Mr.
Donoghue’s fund, but amateur home investors working without pricey
consultants and advisers have done better.
For example, a single investor picking out a mutual fund such as the
popular Vanguard Wellington Fund for a 401(k) retirement plan turned in
average investment returns last year of 14.97 percent, according to the
Vanguard investment firm. Meanwhile, Mr. Donoghue’s fund had a
13-percent return that same year.
Over the last five years, a typical Wellington Fund investor received an
8.9-percent return. The Worcester regional fund earned 6.74 percent.
For the last 10 years, the Vanguard investor enjoyed a 9.7-percent
return, while Mr. Donoghue’s fund brought in 8.4 percent.
And since 1985, the Vanguard customer saw his investments perform at
11.5 percent. The Worcester regional fund, in the same time frame, has
earned 9.7 percent.
Individual investors and PRIT were not the only ones who have topped the
Worcester regional fund.
Many of the state’s most successful local funds, including those of
Concord, Framingham and Lowell, have voluntarily chosen to invest the
bulk of their money with the PRIT Core Fund. These communities’ funds
have not only exceeded the Worcester regional fund’s results, but also
those of standard market benchmarks.
When Sumner B. Tilton Jr., a Worcester lawyer who has overseen
university, foundation and hospital investment funds, was appointed
chairman of the state’s Health Care Security Trust Fund, the first thing
he and his board did after hiring a consultant was put the money into
the PRIT fund.
The fund, which manages money the state was awarded from a settlement
with tobacco companies, has significantly outperformed the Worcester
regional fund in most years since it was established in 2001.
Mr. Tilton said he believes that even his seven-member board, composed
of lawyers, portfolio managers and former chairmen of investment firms,
did not have hands-on expertise to match that of the Public Reserves
Investment Management (PRIM) board led by Michael Travaglini and a staff
of 22 investment experts who work with top outside fund managers.
“We interviewed PRIT and came to the conclusion that its investment
returns were superior,” said Mr. Tilton, who was appointed to the
tobacco fund post by former Gov. Paul Cellucci in 2001 and served until
March of this year. “We also decided to go with PRIT because they were
so large they could hook onto investment vehicles we couldn’t.”
The Worcester regional fund’s asset allocation has been far too
undiversified and over-weighted in low-return bonds, Mr. Tilton said. In
addition, because of its small size, it is forced to pay high management
fees while the state can command lower fees because of its size. Over
time, those fees compound and drag down the fund’s growth.
“The riskiest thing to do is actually what (Mr. Donoghue) is saying is
the safest thing to do,” Mr. Tilton said. “I can’t think of a single
reason not to put the money in PRIT.”
Mr. Travaglini, who works under state Treasurer Timothy P. Cahill,
supports the governor’s legislation, which calls for takeover of all
local funds that have underperformed the PRIT Core Fund by more than
2.25 percent over the last five years or are less than 80 percent
funded.
He argued that local funds such as Mr. Donoghue’s can take advantage of
PRIM’s expertise and size and likely get better returns while spending
less on overhead such as management fees.
“Asset management is a business of scale,” Mr. Travaglini said.
“Our view, based on the position of the PRIM board, is that it’s not
sufficiently diversified,” Mr. Travaglini said of the Worcester regional
fund’s asset allocation.
Mr. Travaglini noted that, even if the funds’ money is taken over, Mr.
Donoghue and his board, and others like it, would be needed to disburse
retirement checks and decide on retirees’ eligibility. That is work Mr.
Donoghue and his staff of six clerks do now with a budget of $806,000.
That budget does not include investment management fees of $2.2 million
in 2006 or a $70,000 payment to consultant Segal Advisors.
But two sources with knowledge of the issue say it’s unlikely that Mr.
Donoghue’s position would still carry the status it has come to assume
over the 29 years he has run the fund, first as county treasurer and
then as chairman and CEO after 2002, when his last elected six-year term
as treasurer ended. The reason is that institutional investing
responsibility conveys more status than issuing retirement checks.
Thanks to an obscure provision in the law that abolished county
government in 1988, Mr. Donoghue and other county treasurers stayed on,
even though some of them, including Mr. Donoghue — who has a bachelor’s
degree in accounting from Nichols College in Dudley — have few formal
qualifications for managing multimillion-dollar pension funds.
The Worcester Regional Retirement Board is a hand-picked five-person
panel, one of whose members — former county commissioner Joann Sharp of
Northboro — is a lifetime appointee. Another is appointed by Mr.
Donoghue, who also acts as a board member. With two members elected by
the retirement system’s members, Mr. Donoghue enjoys a permanent voting
majority.
The board has rewarded Mr. Donoghue. With him abstaining, the board has
voted him regular annual raises of 5 percent to 6 percent, no matter how
well or poorly the fund was performing. He has also received regular
$5,000 bonuses over the years, as well as regular additions to his bank
of sick and vacation time, which totaled 51 vacation days and 138 sick
days as of the end of last year.
The board’s proceedings are not easy for the public to observe. Over the
years, it has met monthly at 7:30 a.m., behind a door in the Worcester
County Courthouse with a sign that says: “No admittance to the public.”
The meetings are, however, open to the public.
An advisory council that was set up in the county abolition legislation
has been given little role in decision-making and appears to have little
interest in the fund. A review of the minutes of the last three years of
meetings of the retirement board reveals that no representative from
member units showed up at meetings to express opinions or question the
board’s decisions about investments.
“They have the right to read the minutes,” Mr. Moschos, the board’s
lawyer who has been acting as a spokesman for Mr. Donoghue, said. He
also said Mr. Donoghue has regularly visited member communities to
discuss the fund.
“Nobody seems to be objecting,” Mr. Dubois said.
While board members say they haven’t received complaints, the towns’ own
lobbyist, the powerful Massachusetts Municipal Association, is urging
passage of the governor’s pension legislation, which is part of the
larger Municipal Partnership Act, intended to raise and save money for
towns and cities.
With members’ retirement checks guaranteed by law, Geoffrey Beckwith,
executive director of the MMA, said pension boards’ main financial
responsibility is to local taxpayers, who must cover unfunded
obligations.
The proposal “makes a lot of sense,” Mr. Beckwith said. “While some
would say you want to have a conservative capital retention strategy,
that only works when you’ve accumulated enough capital.”
Unlike some pension funds, such as the similarly sized one run for
employees and retirees of the city of Worcester, the regional board
makes no comprehensive annual report available to its 7,000 individual
members.
Instead of detailed graphic displays explaining its asset allocation,
such as the 41-page actuarial report posted by the city retirement board
on its Web site, Mr. Donoghue sends a 1-1/2 page letter each year to his
members. Often, a good part of the letter is devoted to lobbying against
this and other efforts to rein in the fund.
The regional retirement board has no Web site.
Mr. Donoghue’s roots in the now-extinct world of county politics are
still evident in the makeup of the retirement board.
When the board left the county system, some of Mr. Donoghue’s supporters
and investment managers went along with him.
Arthur I. Segel, a top executive for T.A. Associates of Boston, one of
whose wings, T.A. Realty Associates, has been in Mr. Donoghue’s
investment manager stable since the mid-1990s, contributed $500 to Mr.
Donoghue’s successful 1996 campaign against Republican challenger Arthur
E. Chase.
Another management company executive, Terrence J. Gerlich, a sales
manager for Freedom Capital of Boston, which also has stayed on with the
fund since the county government days, gave $125 to him that same year.
One of Mr. Donoghue’s longtime retirement board members, Robert R.
Cleary, a former Leicester town accountant, gave him $100 in 1996.
Mr. Donoghue has also remained on close terms with PERAC, the agency
that is set up to regulate his fund. In 1996, the same year that its
current chairman, Joseph E. Connarton, was appointed PERAC deputy
executive director, Mr. Connarton wrote Mr. Donoghue a $100 campaign
check.
Mr. Moschos, the lawyer and spokesman, also gave him $100 in 1996 and
1997. Worcester lawyer Sean T. McGrail, who has long handled most of the
board’s day-to-day legal business, gave him $250 in 1996 and another
$100 just before the retirement board went on its own.
“People should support people for public office,” Mr. Moschos said.
“People give modest sums.”
As for Mr. Donoghue — a famously amiable local fixture who can get along
just as well with powerful figures such as his longtime confidant U.S.
Sen. Edward M. Kennedy as with the average retired municipal employee —
he appears to be keeping up his sunny disposition, even while it appears
more likely than ever that he will lose most of the control over his
fund.
“Playing golf, and missing a two-foot putt going uphill, and then
missing it coming back might not be the best remedy for one’s blood
pressure, but it is something that I enjoy,” he told a Telegram &
Gazette columnist earlier this month.
The Telegram & Gazette
Wednesday, June 27, 2007
Donoghue elects to retire now
Veteran treasurer bows to state takeover
By Shaun Sutner
As a state takeover of his underperforming regional retirement fund
appears close, Michael J. Donoghue will retire next month after nearly
30 years running the county pension fund both as chairman and as elected
county treasurer.
The 63-year-old Democrat, a former Worcester city councilor and
candidate for sheriff who had been on paid sick leave from his $133,500
job since June 5, stepped aside on the eve of House lawmakers’ vote
today on a bill that would place the assets of his $400 million county
pension fund and other underperforming local funds under state
management.
The retirement board announced the retirement of the longtime pension
chief after a 7:30 meeting yesterday morning, an hourlong session at
which board members also discussed the details of merging most of the
fund’s assets with the $50 billion state Public Retirement Investment
Trust fund.
The board released a long letter from Mr. Donoghue, who has weathered
criticism for playing golf the day after going out sick earlier this
month, and for his management of the fund, which has earned returns over
the years that are substantially lower than PRIT as well as smaller
funds.
Over the past five years, the regional fund, with a 6.7 percent
investment rate of return, was ranked seventh-worst among the state’s
107 public pension funds. It ranked 73rd last year, 80th over 10 years
and 72nd since 1985, when local pension funds were required to be fully
funded within 45 years. As of 2004, the fund was 63.5 percent funded,
meaning it had just over half of the assets needed to cover its future
liabilities.
Mr. Donoghue did not attend the meeting yesterday, at the new board
offices in Auburn. But the retirement letter, and a note from his
physician also released by the board yesterday, explained he is
suffering from acute hypertension and anxiety stress disorder caused by
his job duties over the last three years.
Mr. Donoghue did not return several calls seeking comment for this
story.
In his four-page statement, Mr. Donoghue, who has fought the state
takeover of the regional retirement fund — which manages pension assets
for 50 Worcester County towns and another 45 school districts and
housing and water authorities — acknowledged he was no longer able to
forestall the state’s move.
“I realize that the state takeover of regional retirement systems has
become inevitable, and I had hoped to remain involved with the
transition so that we can ensure that the 95 municipal units served by
the Worcester Regional Retirement System undergo a smooth transition
that serves their best interest,” Mr. Donoghue wrote. “I believe this is
the best-run public retirement system in Massachusetts.”
Roger R. Dubois, a retired Dudley building inspector who is acting
chairman of the retirement board, said the board, which has long
approved Mr. Donoghue’s conservative investment philosophy, accepted Mr.
Donoghue’s retirement “with regret.”
The board’s lawyer, Demetrios M. Moschos, said Mr. Donoghue will be
taking regular retirement and has waived any right to a tax-free
disability retirement.
With more than 30 years of public employment, Mr. Donoghue apparently
will be eligible for the maximum retirement rate of 80 percent of his
salary and will receive an annual pension of $106,800. As of December,
he had accrued 51 days of unused vacation time that he is entitled to
under his contract upon retirement. He can also be paid for 30 percent
of his accrued sick time, which totaled 138 days at the end of last
year, according to his contract.
It is not clear whether the sick time Mr. Donoghue has used since
leaving work June 5 affects his sick time bank because Mr. Moschos
stipulated Mr. Donoghue had gone on leave under the federal Family and
Medical Leave Act of 1993. Mr. Moschos said details of the retirement
are still to be worked out.
Political allies of Mr. Donoghue in the Statehouse said that while Mr.
Donoghue has been a respected public figure for many years, they think
the state takeover is a good idea and they plan to vote for it today and
will not try to exempt the regional fund from the takeover formula.
“He’s had a distinguished career as country treasurer and chairman of
the retirement board, but when a pension fund is underperforming, we as
a state government have a responsibility to take it over,” said state
Rep. Vincent A. Pedone, D-Worcester, a cousin of Mr. Donoghue and House
chairman of the Committee on Municipalities and Regional Government.
The pension measure, proposed by Gov. Deval L. Patrick as part of his
Municipal Relief Act, is intended to allow towns and cities to raise
their own revenues and also save on expenses such as pension payments.
At yesterday’s meeting, Kevin Blanchette, deputy executive director of
the Public Employee Retirement Administration, which loosely oversees
local pension funds, told board members they should expect the bill
coming out of committee to include this regional fund along with about
25 others. He praised Mr. Donoghue’s administration of the retirement
benefit system, referring to it as run “efficiently and cost
effectively,” and noted the board will still be needed to distribute
benefits.
“For an operational system, the Worcester system is one of the stars,”
he said. “The job gets done.”
Under the new takeover criteria established by the committee, funds that
performed at least 2 percent under the state fund over the last 10 years
and have a funding ratio of under 65 percent would be captured.
The Worcester regional fund underperformed the state fund by 2.1
percentage points over the decade, as well as being below the
established funded ratio. The state fund returned 10.5 percent, while
the local fund produced an 8.4 percent return.
State Rep. John J. Binienda, D-Worcester, a longtime friend of Mr.
Donoghue who also represents Leicester, which is part of the retirement
system, said Mr. Donoghue did the right thing by stepping down amid
criticism of his management of the fund.
“This way, he takes himself out of the equation and does what’s best for
himself and his family,” said Mr. Binienda, House chairman of the
Committee on Revenue.
The board members, along with Mr. Moschos and Mr. Blanchette, and the
board investment consultant, Kevin Leonard, yesterday appeared ready to
move the fund’s assets into PRIT, but there was no vote on the issue.
Mr. Dubois, the chairman, said such a decision would wait until the
board was able to question the PRIM board about such matters as whether
if they opted voluntarily to join PRIT, the local board could pull out
at a later date, and what management fees the state would charge.
The Boston Herald
Friday, June 29, 2007
Many Boston workers see $100G
By Dave Wedge
Facing charges it has shortchanged programs to save kids from street
violence, the Menino administration is doling out $100,000-plus
taxpayer-funded salaries to a whopping 187 city workers, a Herald review
has found.
From department heads to managers to a surprising number of secretaries
and “executive assistants,” the six-figure paychecks are handed out as
Boston reels from a violence spree that has city councilors demanding
more youth programs.
“The salaries are high,” said Councilor Felix Arroyo, who was one of two
councilors to vote against hiking his board’s pay.
“There are increases (in the budget) but they’re not sufficient
considering the crisis we’re in,” Arroyo said. “If we’re really calling
it a crisis, then why not invest?”
Arroyo and three other councilors -- Charles Yancey, Sam Yoon and Chuck
Turner -- voted against Mayor Thomas M. Menino’s $2.3 billion budget,
arguing that the $4 million for youth services isn’t nearly enough to
address Hub crime woes. The four wanted an additional $6 million.
But Menino spokeswoman Dot Joyce called the budget “fair and equitable.”
“We’re constantly looking for ways to adjust our costs, but we will not
reduce the quality of services for the residents of the city of Boston,”
she said. She added that the city recently renegotiated the Police
Department’s health care contribution in an ongoing effort to control
costs.
City payroll records -- online today at bostonherald.com -- show that 87
firefighters, 23 police officers and dozens of other high-ranking
officials make base salaries in excess of $100,000. Boston Public
Schools was not part of the Herald review, although new school
Superintendent Carol Johnson will be the top paid city worker at
$275,000, followed by Menino at $175,000.
The Boston Public Library has eight employees topping six figures, led
by President Bernard Margolis, who makes $164,000 a year and Operations
Director Ruth Kowal at $116,000. The library is also paying six figures
to its chief financial officer, a map curator, a “facilities officer,” a
“personnel officer” and two managers.
At the parks department, Commissioner Antonia Pollak makes $110,000
while her executive assistant Bernard Lynch gets $101,000.
The mayor’s payroll includes Chief of Staff Judith Kurland ($145,000)
and policy czar Michael Kineavy ($135,000).
At the Department of Neighborhood Development, director Charlotte Golar
Richie makes $122,000 while operations director Joanne Massaro makes
$105,000.
The Administrative Services Department has 16 employees taking home
six-figure salaries, topped by Director William Oates at $150,000. The
department also has four executive assistants and two administrative
assistants making more than $100,000, two of whom make $112,000.
A recent report by the taxpayer watchdog Boston Municipal Research
Bureau found that nearly two-thirds of cops and 25 percent of
firefighters earned more than $100,000 in 2006, including health
insurance, overtime and other compensation.
Bureau president Sam Tyler said the city’s salaries are “on the high
side” and that costs can be expected to continue to rise.
“We want to be sure that Boston is able to attract great talent but it
also means these people need to be held accountable,” Tyler said. “We
need to make sure these employees are performing to the standards of the
taxpayer.”
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