House and Senate negotiators finalized a deal on Monday night to increase the minimum state retirement age to 60 as part of a broad overhaul of the state pension system that proponents say would save more than $5 billion over the next 30 years.
A six-member conference committee filed a compromise bill with the Senate clerk clearing the way for a vote in both branches as early as Tuesday, when the House and Senate will meet in formal sessions to consider several major proposals pending before lawmakers leave Wednesday for a seven-week recess.
“This is a responsible bill to the Massachusetts taxpayers and to public employees. It has already resulted in a boost in our bond rating to AA+, and I think it is living up to our responsibility to those public employee who patrol our streets, educate our kids and run our libraries,” said Sen. Katherine Clark, a Melrose Democrat and the lead Senate conferee on the pension reform legislation.
The deal comes just two weeks after the House unanimously approved a pension reform bill that followed a contentious public debate in the Senate in mid-September when a similar proposal faced fierce opposition from some Democrats and public employee unions.
“The important thing is to the average taxpayer and the average state employee, I think there’s greater transparency and equity and fairness,” said Rep. John Scibak, the co-chairman of the Public Service Committee and the lead House conferee.
The final legislation adopted the Senate’s proposal to boost the minimum retirement from 55 to 60, discarding a House proposal for a smaller increase to 57 in its initial version of the bill. The bill also closed what supporters called loopholes exposed by recent scandals in Weymouth and Chelsea involving public employees who boosted their pensions or inaccurately reported salaries to the state.
“We’re really trying to modernize the pension system, have it reflect more what Social Security does where we can,” Clark said.
Several House amendments were included in the bill, including the establishment of a minimum pension of $15,000 for state workers who have spent 25 years in state government. The bill also includes the first increase in the base salary on which cost-of-living adjustments are calculated, raising the COLA base from $12,000 to $13,000 for state workers.
Citing the fact that some municipalities that have gone beyond $13,000 on their own and concern that others might interpret the increase as an unfunded mandate on local pension system, House and Senate leaders opted against applying the COLA adjustment to city and town workers.
“We believe most municipalities, historically, have always followed the state’s lead on this and we think they will, but many municipalities have already gone above what the state is paying and we wanted to leave that flexibility for them,” Clark said about the compromise.
During debate over pension reform in the House, lawmakers attempted to strike out several loopholes to the state pension law that had come to light in the months following passage of the bill in the Senate, including an attempt by the former mayor of Weymouth to sharply boost his pension by filling in as fire chief in the weeks before he stepped down, simply to boost his payout.
The compromise bill requires that employees who move into a new job that carries a greater pension benefit late in their career hold that position for at least a year before becoming eligible for a larger pension check. The bill also maintained another “anti-spiking” provision “anti-spiking” rule limiting the allowable annual increase in pensionable earnings to no more than 7 percent unless the raise is for a legitimate promotion.
In response to former Chelsea Housing Director Michael McLaughlin admittedly underreporting to the state his $360,000 annual salary, which has come under fire for being excessive, the House and Senate are also prepared to adopt a provision banning an employee from collecting a pension on income that they did not report.
“We have an obligation to protect the taxpayers and the employee who play by the rules, and I think this bill does that,” Scibak said.
The bill also proposes reviews of retiree health insurance benefits and disability retirements.
Other members of the conference committee included House and Senate Ways and Means Chairmen Rep. Brian Dempsey and Stephen Brewer, and Republicans, Rep. Ryan Fattman and Sen. Michael Knapik.
Gov. Deval Patrick proposed increasing the retirement age as part of a pension reform plan in January to reduce the state’s $20 billion unfunded pension liability, which is scheduled to be paid by 2040.
Both Clark and Scibak said the final bill filed Monday night accomplishes the governor’s goal of saving at least $5 billion over the 30 years, with potentially as much as $6.4 billion in savings because of the decision to not force municipal pension funds to increase their COLA base.
“We have been working closely with the administration and the Treasurer’s office, and I think we’re going to have a bill that everyone is going to be excited about passing,” Clark said.