PENSION FUNDING CENTER STAGE AT STATE REVENUE HEARING

DECEMBER 15, 2008: The state’s top budget officials held a day-long hearing on the Commonwealth’s economic outlook for 2009 and the Fiscal Year 2010 Budget at the State House on Monday.

joint_revenue_hearing.jpgCo-chairing the meeting was Secretary of Administration and Finance Leslie Kirwan, House Ways and Means Chairman Robert DeLeo (D-Winthrop) and Senate Ways and Means Chairman Steven Pangiotakos (D-Lowell). The full House and Senate Ways and Means Committees were also impaneled, asking detailed questions of state officials, economists, and the various business leaders who testified on the state’s overall fiscal health.

As expected, experts were in agreement that the effects of the national recession are likely to linger throughout 2009, resulting in severe losses in state revenues. Experts also cautioned against over-using the state’s Rainy Day Fund, ensuring that it could be tapped to help balance the budget over the next two-three fiscal years.

State Treasurer Tim Cahill addressed the panel on a variety of issues. Of greatest importance to retired public employees was Cahill’s assessment of the Commonwealth’s pension system, which is down some 30% through November. He explained that pension funding is a long-term process and that Massachusetts, due to the diversification of its pension assets, is not in danger of not meeting retiree pension obligations.

Joining Cahill at the hearing were officials from the Public Employee Retirement Administration Commission (PERAC). Executive Director Joseph Connarton and Actuary James Lamenzo answered questions from Committee members, which included an analysis of past early retirement incentives.

Multiple studies have shown that previous ERIs resulted in significant costs to the state, as well as municipal governments that backfilled the positions. Kirwan, citing the same studies to which the PERAC officials referenced, indicated that a new ERI is unlikely to occur.

Association officials were present at Monday’s meeting and will continue to monitor developments as they occur.

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