Tag: Pioneer Institute

MBTA retirement fund is headed for a financial reckoning

Mary Pat Campbell

Link: https://www.bostonglobe.com/2023/06/19/opinion/mbta-retirement-fund-finances/

Excerpt:

The MBTA Retirement Fund is going over a cliff, and the reasons why are well known. But neither the T nor its unions are in a hurry to do anything about it.

The new MBTA Retirement Fund Actuarial Valuation Report shows the fund’s balance as of Dec. 31, 2022, was $1.62 billion — about $300 million less than what it was just 12 months earlier. Its liability — the amount it will owe current and future T retirees — is over $3.1 billion, meaning the fund is about 51 percent funded. In 2006, it was 94 percent funded. A “death spiral” generally accelerates when retirement system funding dips below 50 percent.

In April, the Pioneer Public Interest Law Center got the MBTA to hand over an August 2022 arbitration decision regarding a pension dispute between the T and its biggest union. It contained a critical win for the authority: Arbitrator Elizabeth Neumeier decided that most employees would have to work until age 65 to earn a full pension, saving the MBTA at least $12 million annually.

But the Carmen’s Union sued to invalidate that portion of the decision, and the parties returned to the bargaining table. The new pension agreement they hammered out doesn’t include the historic retirement age victory; T management negotiated it away.

….

As of Dec. 31, 2022, 5,555 active employees paid into the fund, but 6,783 retirees collected from it. The biggest reason for the mismatch is the age at which T employees retire. Those hired before December 2012 can retire with a full pension after 23 years of service, regardless of age. Those hired after December 2012 can retire with a full pension at age 55 after 25 years.

The arbitrator finally gave the MBTA the win it so desperately needed, and T management promptly gave it back. Many MBTA managers have long opposed changing the age at which employees can earn a full pension, fearing the reaction of T unions.

….

Hard as it may be to believe, the T retirement fund’s financial outlook is even worse than it appears. Financial projections assume the fund’s assets will earn 7.25 percent annually. Over time, actual returns have been more like 4 percent to 7 percent.

These misleading projections are based on other faulty assumptions. In her 2022 decision, Neumeier refused the MBTA’s request to use newer actuarial tables, ruling that changing would be costly and that there was no compelling reason to update the tables. The ones in place are from 1989 — so old that they assume all T employees are men. Since women tend to live longer, the tables materially understate the retirement fund liability.

Author(s): Mark T. Williams, Charles Chieppo 

Publication Date: 19 Jun 2023

Publication Site: Boston Globe

Study Finds Pension Obligation Bonds Could Worsen T Retirement Fund’s Financial Woes

Mary Pat Campbell

Link: https://pioneerinstitute.org/featured/study-finds-pension-obligation-bonds-could-worsen-t-retirement-funds-financial-woes/

Graphic:

Excerpt:

A new study published by Pioneer Institute finds that issuing pension obligation bonds (POBs) to refinance $360 million of the MBTA Retirement Fund’s (MBTARF’s) $1.3 billion unfunded pension liability would only compound the T’s already serious financial risks.

With POBs, government entities deposit revenues from bond sales into their pension funds and use the money to make investments they hope will deliver returns that outpace borrowing costs.

“Virtually every study of POBs finds that timing and duration of the bond issues are critical,” said E.J. McMahon, author of “Rolling the Retirement Dice.”  “Bonds floated at the end of a bull market are the most likely to lose money, and that makes this idea a wrong turn at the worst possible time.”

If investments don’t meet a pension fund’s assumed rate of return, it could be left with debt service costs in addition to the pre-existing unfunded liability.  In 2015, the Government Finance Officers Association bluntly warned that “State and local governments should not issue POBs.”  It reaffirmed its guidance last year.

Author(s): E.J. McMahon

Publication Date: 21 Jun 2022

Publication Site: Pioneer Institute

Public Statement on the MA Legislature’s Blanket Pension Giveaway

Mary Pat Campbell
Public Statement on the MA Legislature’s Blanket Pension Giveaway

Excerpt:

And it doesn’t apply just to state and municipal workers who had to actually go into work during the pandemic; they must only have “volunteered to work… at their respective worksites or any worksite outside of their personal residence.”  Employees who went in for a single day would also qualify.  So do employees who worked from home but one day when the internet was down went to a family member’s home to work.  (They meet the provision that you did your job from a “worksite outside of [your] personal residence.”)

Administrators, accountants, techies, teachers, finance officers, grant writers, trash collectors and all those paid with public dollars are potentially in line for the benefit.  As currently written, state legislators are eligible to take advantage of the bill.  More than half of the Legislature has signed on to H.2808. Support spans the political spectrum.  The bill may provide a jump in pension benefits for those employed during the pandemic who have already retired.

…..

Pioneer estimates that the bill’s cost would be in the billions of dollars. As of this May, the state pension fund, state Teachers’ Retirement System and the Boston Teachers Retirement system were underfunded by a combined $44 billion.  Annual payments to the systems are scheduled to rise from the current $3.1 billion to nearly $12.4 billion over the next 15 years, and would be even higher under H.2808.  The bill would also further burden over 100 local pension funds in the Commonwealth, many of which are already woefully underfunded.

Author(s): editorial staff

Publication Date: 26 July 2021

Publication Site: Pioneer Institute

The Massachusetts ‘Essential Worker’ Pension Boost Proposal Is A Case Study In Public Pension Failures

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2021/08/19/the-massachusetts-essential-worker-pension-boost-proposal-is-a-case-study-in-public-pension-failures/

Graphic:

Excerpt:

The text of the bill, H. 2808/S. 1669, is brief. All employees of the state, its political subdivisions, and its public colleges and universities, a bonus of three years “added to age or years of service or a combination thereof for the purpose of calculating a retirement benefit,” if, at any point between March 10, 2020 and December 21, 2020, they had “volunteered to work or who [had] been required to work at their respective worksites or any other worksite outside of their personal residence.”

…..

In subsequent reporting, government watchdog group The Pioneer Institute voiced its opposition. In a statement posted on their website, they criticized the broad coverage — acting as an unfunded mandate for municipalities, including workers even if they had worked outside their home for a single day, encompassing both blue collar and white collar workers. They estimate the bill’s cost at “in the billions of dollars” and point to a massive boost even for a single individual, the president of the University of Massachusetts, whose lifetime pension benefit would increase by $790,750.

…..

And left out of Zlotnik’s proposal is a recognition that the state’s main retirement fund is 64% funded, and the teachers’ fund, 52%, as of 2019.

Author(s): Elizabeth Bauer

Publication Date: 19 August 2021

Publication Site: Forbes

Massachusetts COVID-19 Vaccine Tracker

Mary Pat Campbell
COVID-19 Vaccine Tracker

Graphic:

Excerpt:

COVID-19 vaccination, particularly the disparity of rates between racial and ethnic groups, takes up much of the current talk about the pandemic. The Massachusetts Department of Public Health (DPH) publishes vaccination data every day, for municipalities, tracking rates by age group, racial and ethnic groups, and by gender.

Pioneer is proud to present a new vaccine tracker, the newest tool in our COVID-19 tracking project. Pioneer distilled the vaccination data down to those who are either fully vaccinated or partially vaccinated, by all the demographic categories published by the DPH. Use the new tool below to compare rates among groups, by municipality and by county. We will update the data every week.

Date Accessed: 20 April 2021

Publication Site: Pioneer Institute

Study: Graduated Income Tax Proponents Rely on Analyses That Exclude the Vast Majority Of “Millionaires” to Argue Their Case

Mary Pat Campbell
Study: Graduated Income Tax Proponents Rely on Analyses That Exclude the Vast Majority Of “Millionaires” to Argue Their Case

Graphic:

Excerpt:

“Professor Young’s wealth migration analyses don’t capture the full breadth of tax flight by million-dollar earners,” said Andrew Mikula, co-author of “Missing the Mark on Wealth Migration: Past Studies Drastically Undercounted Millionaires.” “High-net worth households that do financial planning could move to another state before they sell million-dollar assets. They fly under the radar in Cristobal Young’s work because most of them don’t earn more than $1 million in the year before they leave.”

The graduated income tax proposal advanced by the Massachusetts Teachers Association, the Service Employees International Union, and other union, advocacy, and religious groups, defines earnings as including salary and capital gains on the sale of assets, which makes net worth a critical component of households subject to the tax.

Publication Date: 25 March 2021

Publication Site: Pioneer Institute

Report Contrasts State Government and Private Sector Employment Changes During Pandemic

Mary Pat Campbell
Report Contrasts State Government and Private Sector Employment Changes During Pandemic

Excerpt:

Massachusetts state government employment has been virtually flat during COVID-19 even as employment in the state’s private sector workforce remains nearly 10 percent below pre-pandemic levels, according to a new study published by Pioneer Institute. The study, “Public vs. Private Employment in Massachusetts: A Tale of Two Pandemics,” questions whether it makes sense to shield public agencies from last year’s recession at the expense of taxpayers.

“Compared to restaurants, retailers and other businesses, there was very little pressure on state government to cut costs associated with COVID’s economic fallout,” said Serena Hajjar, who authored the study. “The private sector has felt the bulk of the pain of this contraction.”

At one point in April 2020, total employment in Massachusetts was 23 percent below pre-pandemic levels, while at the same time state-level government employment was higher than it was in February 2020.

Author(s): Editorial Staff (press release)

Publication Date: 15 March 2021

Publication Site: Pioneer Institute

MA State Workers Had More Job Security In Pandemic: Study

Mary Pat Campbell

Link: https://patch.com/massachusetts/boston/ma-state-workers-had-more-job-security-pandemic-study

Excerpt:

 Job losses during the coronavirus pandemic disproportionately hit the private sector workforce in Massachusetts, according to a Pioneer Institute report being released Monday.

The report found the state government payroll has been flat throughout the pandemic, while the private sector workforce remains 10 percent below its pre-pandemic level. At the peak of job cuts last April, the state’s overall unemployment rate was 23 percent, even as state government employment rose higher than it had been in February 2020.

“Compared to restaurants, retailers and other businesses, there was very little pressure on state government to cut costs associated with COVID’s economic fallout,” said Serena Hajjar, who authored the study for the conservative think tank. “The private sector has felt the bulk of the pain of this contraction.”

Author(s): Dave Copeland

Publication Date: 14 March 2021

Publication Site: Patch

New Study Finds Pandemic-Spurred Technologies Lowered Barriers to Exit in High-Cost States

Mary Pat Campbell

Link: https://myemail.constantcontact.com/Press-Release–New-Study-Finds-Pandemic-Spurred-Technologies-Lowered-Barriers-to-Exit-in-High-Cost-States.html?soid=1107718355130&aid=MZYC-NYVCD4

Excerpt:

Both employers and households will find it easier to leave major job centers as technologies made commonplace by the COVID-19 pandemic have led to a rethinking of the geography of work, according to a new study published by Pioneer Institute. 

“The pandemic has changed the calculus on whether telecommuting is worth it, for both employers and workers,” said Andrew Mikula, author of “Barriers to Exit Lowered in High-Cost States as Pandemic-Related Technologies Changed Outlook.” 

The study draws on survey data projecting that a third of workers could be permanent telecommuters by the end of 2021 and discusses implications of these trends for transportation, municipal finance, and wealth migration. While worst-case scenarios could bring a level of disinvestment in places like New York City not seen since the 1970s, even a mid-range scenario suggests a significant relocation of jobs and potentially wealth.

Author(s): Pioneer Institute

Publication Date: 10 February 2021

Publication Site: Constant Contact