Patrick targets pension loopholes

Seeks to quell anger, generate big savings

By Andrea Estes
Globe Staff / March 22, 2009
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The Patrick administration today will unveil a series of proposed reforms designed to close loopholes in the state pension system that have allowed workers to dramatically inflate their retirement benefits at a cost of millions of dollars to taxpayers.

Officials say they hope the changes can generate "significant" cost savings. Just as important, they said, is ending abuses that have angered the public, whose support the governor needs as he seeks to close an ever-widening budget gap. Taxpayers have made it clear they want government to cut spending and curb abuses before they will support any tax hikes.

"In addition to the savings, there is also the perception of fairness," said Patrick spokesman Kyle Sullivan. "It's not only the public, but other government employees who follow the rules feel others are getting away with something. "

Patrick's plan, released in advance of an April 6 House hearing on pension reform, would eliminate the most egregious forms of abuse. Some of the changes, which require the Legislature's approval, would apply to current employees. All of the changes would apply to future employees.

But they would not apply to any retired employees.

House Speaker Robert DeLeo, who has made pension reform a top priority, said yesterday in an e-mail that he looked forward to working with Patrick and Senate President Therese Murray.

"I've heard loudly and clearly from the public that we need to rein the pension system in," DeLeo said. "There will be reform."

Murray pledged in an e-mail to work to overhaul the system.

"With a shared commitment between the Legislature and the administration, we will advance common-sense pension reforms this session to eliminate loopholes and help restore public confidence in our pension system," she said.

Among his proposed changes, Patrick hopes to abolish the rule that allows employees who work only one day to receive a full year for pension purposes.

Former House speaker Salvatore F. DiMasi, for example, resigned in January, but was credited with a full year's service.

He has begun collecting a benefit of just under $60,000 a year.

The governor's plan would also eliminate termination pensions, an obscure provision that allows officials who are fired to collect an early retirement benefit much larger than what they would have received had they left voluntarily.

Officials say this rule - originally designed to prevent political purges after a change in administration - is regularly exploited by officials who say they were terminated simply to qualify for the benefit.

Among those who have collected termination pensions is Peter Forman, former acting governor Jane Swift's chief of staff, whose application was originally denied by the state's retirement board.

The board later reversed the decision.

The Globe reported in February that Jeffrey Simon, Patrick's stimulus czar, has been collecting a termination pension since he was fired by the Massachusetts Government Land Bank in the mid-1990s.

And two years ago DiMasi fired executive assistant Donna Sweeney 11 days after she had worked the 20 years necessary to qualify for the benefit.

Patrick's plan would also prohibit workers from buying pension credit for time spent working in nonpaying public jobs. The law has allowed officials such as two town moderators from Canton and Milton, as well as lobbyist John A. Brennan Jr., to receive credit for essentially volunteer work, according to Globe articles.

In a recent story, Canton's former town moderator, Michael P. Curran, told the Globe he simply took advantage of a benefit that was legal. "I was entitled to something and I took it," he said.

Patrick's reformer role has come into question in recent weeks after actions that have spurred controversy, including his handing a $175,000-a-year agency job to Senator Marian Walsh, an early campaign supporter.

Last week he called several news stories "trivial," including those about Walsh's patronage hire and a Globe article that described how Transportation Secretary James A. Aloisi Jr.'s sister, whose $60,000-a-year title was "chief of staff," worked in an empty State House office for six months with no apparent duties.

Patrick's plan would also:

  • Abolish the MBTA's generous policy allowing employees with 23 years of service to retire with full benefits regardless of their age. This provision has enabled many MBTA workers to retire in their 40s and then take other jobs while collecting their pensions.

  • Prohibit public employees from collecting two pensions after holding multiple jobs at the same time. That change would address the case of Charles Lincoln, the retired Brockton police lieutenant dubbed "the poster child for pension abuse" for collecting nearly $140,000 from two public jobs.

  • Define regular compensation as wages only. Presidents of the state's public colleges and universities have been allowed to count housing and transportation allowances as compensation after William Bulger, a former University of Massachusetts president, fought for the perk and won. Counting his housing allowance boosted his pension by $17,000 to $196,000 a year.

  • Eliminate double pensions for employees who retire under one system and then take another government job, such as a judgeship, with a separate pension system.

  • Bar employees from receiving an accidental disability benefit after being injured while filling in for a supervisor. Some Boston firefighters have been collecting benefits based on their bosses' higher pay level after getting injured on the job while subbing for them.

    Patrick officials hope a pension commission established last year will look at other potential changes including placing a dollar cap on the amount of any employee pension and beefing up enforcement and oversight of the pension laws.

    "This is a terrific package of reforms that will end many of the abuses that have justifiably upset taxpayers for so long," Michael Widmer, president of the Massachusetts Taxpayers Foundation, said in a phone interview yesterday.

    "These virtually daily stories of excesses and abuses of state and local pension systems are particularly galling because they fly in the face of the enormous struggles and concerns the average citizen is facing."

    Widmer, who has been pressing for pension reforms for years, said the time is ripe for major changes.

    "The combination of the public outrage and the fiscal crisis presents a real opportunity to pass these reforms," said Widmer, who said that closing the loopholes would "over time save tens of millions of dollars a year."

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