DAVE FLAHERTY
WESTFIELD – The last item on the City Council’s Feb. 18 agenda was a motion by At-large Councilor Dave Flaherty to investigate the impact of the recently proposed Teacher Early Retirement Incentive program on the city’s budget. The bill, SD.1111 was presented by Sen. John C. Velis (Second Hampden and Hampshire) on Feb. 11.
Flaherty said one of the goals of the bill is to allow older teachers to retire early, by allowing teachers to add five years to their age and five years to their years of service. He said it could potentially increase the cost of healthcare and severance for five years, and potentially increase their pensions from 50 percent to 80 percent.
“Aren’t we jumping the gun here,” said At-large Councilor James R. Adams during the discussion, adding that a lot of work would be put in that might not have to be done.
Flaherty said the proposed law is for a local option that the school committee and the city council would have to accept, and could come before the council in April or May, or sooner.
“Before we accept any special act, we need to know what the real costs are. I don’t think there’s any harm in doing the research early,” he said, adding that he spoke to Velis and state Rep. Kelly Pease, who indicated to him that health care options would have to be negotiated with the teachers’ unions.
“If we want some wiggle room, we have to give the mayor wiggle room, too,” Flaherty said, adding that he wanted to refer the motion to Long Range Finance, the committee that he chairs, as well as to the Personnel Action Committee.
At-large Councilor Richard K. Sullivan Jr. said he would support the motion, but he would ask that Long Range Finance and Personnel take into consideration that it is just a bill and hasn’t yet passed. “There are several proposals out there. This is a long way from done,” Sullivan said, adding that he thinks it’s “wildly premature.” He also asked to add the mayor into the motion, to which Flaherty agreed.
Personnel Action Committee Chair Cindy C. Harris said that she would be a no vote on the motion, which she said would require speculation and is also a highly charged political issue.
At-large Councilor Kristen Mello said if it’s still in bill form, then “it’s good to let the smart kids do the math,” which she said could help people give input into the bill.
The motion passed by majority.
After the meeting, Flaherty said retiring teachers are supposed to agree to pre-pay or reimburse the retirement system for the financial impact. “The legislators believe this means it will not affect the health of the retirement system. Some of the teachers interpret this as they’d just have to pay five years of normal retirement contributions plus some earnings. There’s a huge difference in perceptions,” Flaherty said.
Flaherty said the Massachusetts Teachers Retirement System is not exactly healthy, and requires 8.94% additional state funding every year on a compounded basis. “Like other state pensions, this will place huge burdens on the state budget going forward,” he said.
Flaherty gave the following example: “A 54 year-old teacher with 30 years of service would currently qualify for a 54% pension under the Retirement Plus plan. If their current salary was $75,000 and their three year average was $73,777, their current pension benefit could be $39,839 per year. If they lived until 80 years-old, the pension payout (excluding future cost of living increases) would be about $1.075M.
“Under the proposed plan, it looks like they can add both 5 years of age and service, so that 54 year-old would now get the benefits of a 59 year-old with 35 years of service. That’s an 80% pension under the Retirement Plus plan. Using the same $75,000 salary and $73,777 three year average, their new pension could be $59,022. If they lived until 80 years-old, the pension payout (excluding future cost of living increases) would be about $1.593M.
“Five years of contributions to retirement and earnings would be about $60,000 for that $75,000 salary. That doesn’t seem to me like it would cover over $500,000+ in additional payout,” Flaherty said.
Westfield Superintendent Stefan Czaporowski said the issue is on the agenda for the school committee meeting Feb. 22. He said the human resources director and the Westfield Education Association president would be presenting the proposal to the school committee, who must approve the proposal before it goes to the city council.
“The reality is that this legislation was just filed this week. The proposal has not been enacted yet and there is no guarantee that it will be. Our human resources department is currently generating preliminary projections on how the early retirement legislation could affect our school system so that we are prepared. And we will be presenting this proposal to the school committee for the first time at our next meeting on Monday, Feb. 22 since this legislation requires school committee approval prior to the endorsement of the city council,” Czaporowski said.
