At its March 29th meeting, the Newton Retirement Board included two budget funding presentations: one from Mayor Ruthanne Fuller and the other from City Council Board President Susan Albright and Ward 2 School Committee member Chris Brezski. Both presentations were in response to the March 14th failed operational override.
Mayor Fuller, accompanied by Newton Chief Financial Officer Maureen Lemieux, acknowledged that these were “very difficult times,” noting the market downturn and high prices “at the grocery store and gas station.” She assured the Board that it is the City’s duty to ensure the integrity of retirement for current and future retirees. Her plan (explained in greater detail in her newsletter sent later in the day) is to increase the base amount on which Cost of Living Adjustments (COLA) are applied by $1000 per year for three successive years — thereby raising the amount from the current $12,000 to $13,000 in FY24, to $14,000 in FY25, and $15,000 in FY26. In addition, she wants to extend the pension funding schedule to August of 2031. (It was previously scheduled to extend to 2030.) She cited the plummeting 2022 stock market as the reason for necessitating the pension funding extension.
In addition, the Mayor made a plea for the funding adjustment to help pay the cost for the Horace Mann addition/renovation project. “The north side of the city needs and deserves the addition to Horace Mann,” she said, adding, “I would have preferred an override.” She concluded by telling the Board that “it’s your decision” to accept her proposal. Board Chair Thomas Lopez noted the losses retirees have suffered and worried about pushing full pension funding closer to the 2040 legal deadline. The Mayor asked if the Board would meet with her and the actuary working with the City to determine projected budget costs. Board member Kelly Byrne wanted to be sure about the COLA increase before agreeing to other measures.
City Council President Susan Albright and Ward 2 School Committee member Chris Brezski, who is an endowment manager, noted that the pension trust is funded at an annual rate of 9.6% but Newton’s revenues increases at about 3.5% annually. They argued that at that rate, funding the pension will “crowd out” school and City services. Their suggestion is that the full pension funding should extend until 2035, thereby lowering the annual percentage the City must contribute to the pension fund, freeing cashflow for other purposes. President Albright emphasized that their plan was to slow the rate of growth, not to cut the funding, and she assured the Board that: “There is no pensioner who would be impacted by this.”
Making the case for the change in funding, President Albright said, “If the Board insists on a 9.6% rate of growth, especially in the face of the failed override, with no likelihood of another request for ten years, City services will severely degrade.” And, she noted, that will have a serious impact on Newton’s schools.
President Albright and School Committee member Brezski met with the Mayor the day before the meeting, but said the Mayor did not reveal her funding plan to them. In responding to the Retirement Board’s concerns about her suggested approach, President Albright assured the Board that the proposal she offered was a point for discussion and that she and Mr. Brezski were willing to continue the discussion.
