Letter To The Editor: Avoiding Some Painful Budget Cuts By Delaying Pension Pay Down

Photo: Belmont should not continue to pursue a pension pay down plan. (credit: Pixabay)

Letter to the editor:

It looks like the defeat of the override will lead to the loss of several school teachers, at least one fire fighter and police officer, and several DPW employees, as well as cuts to many important services for seniors and others. I’m guessing that even those who opposed the override will consider this prospect to be unfortunate. 

With this in mind, it is absolutely critical that we identify any moves we can make to free up money in the budget. While it would be nice to do so, we can no longer afford to achieve 100 percent funding status on our pension liability eight years before we have to. According to an October 2020 report by the Segal Group, we are currently spending almost $9 million a year to reduce our pension liability and will boost this expenditure by about 4.5 percent annually until it hits $13 million in 2031 to eliminate the liability by 2032. If, as we are free to do under the applicable state law, we adjusted our full funding target date to 2040, we could free up at least several hundred thousand, if not more than $1 million, a year. This adjustment would enable us to avoid some painful budget cuts, lower our structural deficit and the size of the next override while preserving our commitment to provide the pensions we promised to our employees.  

If you think that Belmont should not continue to pursue a pension pay down plan aimed at achieving full funded status several years ahead of when it is legally required, please ask the Select Board, the School Committee, and the Town Administrator to reach out to the Retirement Board, which determines the pension funding schedule, and request that it extend the full funding target date to 2040.

Dan Barry, Town Meeting Member, Precinct 1, Goden Street

Share This ArticleShare on FacebookTweet about this on TwitterShare on Google+Pin on PinterestShare on LinkedInPrint this pageEmail this to someone

Comments

  1. Thomas Curran says

    Some good thoughts, but I believe these costs are due to the past kicking the can down the road. No exercise is a waste and continuing discussion may bring a resolution. As far as pensions let’s stay the course , and finish what’s been laid out. When its objective is met payment responsibility will drop significantly. Like previously stated thanks for the work and creative thinking

  2. Andrew says

    Hi Dan thanks for raising this topic and for proactively looking for ways to alleviate the coming budget crunch. I’m not well versed with this topic so perhaps I’m missing important context, but this looks like it would incur a ton of long term pain for relatively limited short term gain.

    Taking your numbers at face value, the total cost to retire our pension liabilities would be almost twice as high under the 2040 scenario (225M vs. 121M) vs. the current plan. In exchange for an average of 1.5M / year of relief over the next ten years, we’d be signing up for almost 15M (!!!) a year of new spending between 2032 and 2040. These numbers are rough approximations based only in the figures in your letter, but if they’re even close to accurate then this seems like a very bad deal.

    Funding cuts to schools, public safety, seniors, and public services are a shame, but ultimately something that Belmont can manage through. Even without the override, Belmont will still be a great place to live and work 10 years from now (even if our roads have a few more potholes, or our elementary classrooms average 18 vs. 17 kids). Kicking the financial can down the road will make these problems worse, not better. Saving 1.5M / year over the next decade is just not worth burdening the next generation of Belmont families with an annual bill ten times that high.

    Am I misunderstanding the choice here, or are my numbers way off?

    Again, thanks for you work and creative thinking here. We need people like you doing the work to figure out ways to make our town better and manage through the tradeoffs that come hand in hand with the lower taxes we voted for. My gut is that I don’t agree with you on this specific topic but I’m open to changing my mind if my numbers are off.

Leave a Review or Comment

Your email address will not be published. Required fields are marked *