The retiree dilemma

September 27, 2014

Boston Herald Editorial

Among those items of unfinished business the Patrick administration — and this sitting of the Legislature — leave behind is any attempt to reform the health care benefits paid to retired municipal workers that are bankrupting the state’s poorest communities.

A new report by the Massachusetts Taxpayers Foundation documents in distressing detail the scope of the problem. They studied spending for retiree health care by nine of the 10 municipalities with the lowest per capita income in the state (data for Fall River wasn’t available). What they found in general is that the rising cost of retiree health care was squeezing budgets so severely that either communities were cutting current employees or curtailing growth in critical areas such as education.

In the nine communities studied, the costs of retiree health care coverage rose 24 percent between fiscal 2009 and fiscal 2013. During that same time property taxes grew at half that rate — 12.1 percent.

In Amherst those costs rose an astonishing 44 percent.

Collectively the nine communities had to cut 1,000 employees during the years studied just to hold the line on local budgets.

The problem isn’t new; it’s just gotten worse. Mass. Taxpayers last reported on the issue back in 2011. Gov. Deval Patrick responded with a reform package in 2013. The Legislature did, well, nothing.

And since these benefits are governed by state law, they do require a state solution.

Under current law a municipal worker needs only 10 years of service to receive full benefits for life, in some cases starting at age 55 (a 2012 change in the law increased the age by five years in each pension category). And the benefits are incredibly generous ones — most of the cities studied covered at least 75 percent of premiums. So requiring at least 20 years of service is hardly asking a lot. Mass. Taxpayers also recommends pro-rating benefits for part-timers (who currently qualify for full benefits).

And, the group suggests that changing the law only for new hires isn’t going to solve the problem. Reforms “must apply to a broader group.”

Sure, that’s hard stuff when it comes to lawmakers who have been in thrall to public employee unions, but it’s also critical stuff.

The next governor must make it part of his or her agenda.