Bill Filed To Wipe Out Middlesex Retirement Board

MARCH 2003
- Dissidents Would Create New Board - Legislation, which would abolish the Middlesex Retirement Board as
now constituted and create a new board, has been filed on behalf of a
small number of disgruntled towns.

The
Board, which invests $520 million in pension funds on behalf of
employees and retirees of 31 towns and 36 local authorities and
districts, has been targeted by some municipal officials because of the
recently announced increase in the pension fund assessment for the
coming fiscal year.

Each of the 67
units in the Middlesex Regional System (formerly Middlesex County) is
assessed on a pro rata basis, their share of the system's retirement
costs. The assessment is roughly based on the size of each unit's
payroll, plus other factors.

The
units have been notified that their assessment for the coming fiscal
year will be increased by an average of 21%. And that's where the rub
comes in.

The five-member Middlesex
Retirement Board has made every attempt to hold down the costs to the
member towns or units. Unfortunately, like all retirement funds, the
Middlesex fund has suffered three straight years of investment losses
due to the depressed market. Middlesex losses have been no greater than
any of our state's 106 retirement funds. And, in fact, Middlesex has
consistently maintained an investment earning record that ranks in the
top quartile of all systems.

Board
Chairman Jim Fahey and Burlington Town Treasurer Brian Curtin, a
22-year member of the Board, met with town officials and explained the
need for the increase in order to maintain the retirement system's
funding schedule which requires that all obligations be fully funded by
Year 2028. Fahey and Curtin also pointed out that the increase of 21%
was down from an earlier estimate of 44%, after the Board hired a new
actuary and took steps to "smooth" annual assessments. The towns were
also guaranteed increases in assessments of only 4.6% in fiscal 2005
and fiscal 2006.

Most towns and
other units were satisfied with the explanation, but 6 or 7 towns,
including Weston which has the highest per capita income in the state,
decided that a new board could do a better job.

The
bill, filed by Rep. William Greene (D-Billerica), would have three
elected representatives from the system's retirement advisory council,
which consists of a member from each of the 67 participating units, and
three elected members from among the employees and retirees of the
system. These six members would appoint a seventh member. If an
agreement couldn't be reached on a seventh member, PERAC would make the
appointment. The Board would then appoint an executive director, who in
turn would hire a treasurer-custodian and a comptroller.

Currently,
the Middlesex Board consists of five members, two of whom are elected
employee/retiree representatives. The system's advisory council elects
a member, and another member, who does not belong to the system and is
appointed by the other members, also sits on the board. These four
members elect a fifth member who is the chairman for a six-year term.

Curtin,
who is currently the advisory council's elected member, does not feel
that the legislation would in any way increase the efficiency of the
retirement system. "We have been one of the top retirement systems in
the state over the past 50 years," he said. "Our board and staff are
second to none in servicing the system's employees, retirees and
survivors. And we are always aware of our obligation to the taxpayers
at all times.

"It just so happened
that fiscal conditions forced the board to increase assessments in the
coming year. It's unfortunate that a small number of town officials
would point their fingers at our board and draft such a bill now."

"It's
not uncommon for local officials to look closely at the performance of
their county or regional retirement systems," said Association
President Ralph White. "And when there's an exceptional increase in an
assessment, it's easily explainable, as was the case in Middlesex."

Middlesex
was one of the counties whose government was abolished, and a regional
retirement system was established in place of the previous system.
County employees then became state employees, with the system
continuing to serve participating towns and districts as it had in the
past.

"Jim Fahey and the Middlesex
Board did an outstanding job of making the transition and reaching a
fiscal agreement with the state that was really beneficial to the
retirement system and its member communities," White said. "It is
disingenuous of the 6 or 7 towns that are party to this legislation. No
one seems to know for certain who they are.

"Representative
Greene filed the bill at the request of the Billerica town manager. It
is an effort by a minority of the towns to discredit a retirement board
that has worked through a very difficult transition period, and moved
its headquarters from Cambridge to Billerica where it is now in the
epicenter of its membership.

"We owe
it to our members in the Middlesex System to defeat this legislation.
The current Board members have worked closely with us over the years in
helping retirees, especially as leaders in promoting our COLA law. From
our viewpoint, it's a bad bill."

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