Appearing before the Joint Committee on Public Service, MTF President Michael J. Widmer testified in support of the Governor's pension reform bill, which would save an estimated $2 billion over the next 30 years by making modest changes in the pension plan for state and local government employees in Massachusetts. Unless addressed, the escalating and unsustainable costs of pension and health benefits for public employees will lead to the layoffs of thousands of teachers, police, firefighters and other municipal employees across the state in the years ahead.
According to a recent report by the Pew Center on the States, Massachusetts is one of only eight states with more than one-third of its total pension liability unfunded. Many municipal pension plans are in even worse shape; roughly half of the 104 plans have lower funded ratios than the state, and 10 communities are funded below 50 percent.
As a result of the sharp decline in pension assets and the corresponding increase in unfunded liabilities, virtually every city and town is facing a large jump in pension payments in either their fiscal 2011 or 2012 budgets. To address this problem, the Legislature is considering a 10-year extension of the pension payment schedule for municipalities from 2030 to 2040. However, passing an extension of the payment schedule without key reforms that address costs will likely lead to a series of credit downgrades for many municipalities, exacerbating their already difficult financial conditions.