Newton City Council meets to consider budget options

In 2022, City Council President Susan Albright had appointed a study group — including City Council Vice President Rick Lipof, Finance Committee Chair Becky Grossman, and Councilor Chris Markiewicz — to work with her and with Newton School Committee member Chris Brezski to develop a plan to adjust the rate of funding of the Pension Trust, which was growing faster than the City budget could sustain. After the March 14 failure of the override, the City has been seeking other money to fund the renovation of Horace Mann School and perhaps allow for some other expenditures earmarked in the override. The group of City Councilors — known as the GLAM Committee (Grossman, Lipof, Albright and Markiewicz) — met regularly with Mr. Brezski, who demonstrated ways to reduce the rate of funding the Pension Trust fund to align with the City’s revenue growth.

On March 30, Mayor Ruthanne Fuller appeared before the Newton Retirement Board to ask that it consider an adjustment to the retiree pension funding schedule that would free some money to make up for the defeat of the override. According to her proposal, the retiree Pension Trust funding schedule, which according to state statute must be fully funded by 2040, would be accomplished by 2031 rather than 2030 as currently planned. At the same time, Mayor Fuller proposed that beginning in 2024 and continuing until 2026, the city would increase the base amount on which the Cost Of Living Adjustment (COLA) is calculated, from $12,000 to $15,000 by 2026. In pushing back the funding date, Mayor Fuller said that the City would be able to free enough money to pay for renovation and expansion of the Horace Mann School, which had been included in the failed override.

President Albright, Councilor Grossman, and Councilor Markiewicz met with the Mayor on March 29 to talk about a plan offered by Mr. Brezski that would reduce the annual amount of money the City pays into the pension fund from an annual rate of 9.6% of City money to 3.5%, the rate by which the City funds increase, and still pay off the obligation before 2040. Mayor Fuller did not share full details of her plan to offer the Retirement Board the COLA option, which she presented to the Retirement Board the next day.

Not knowing of the Mayor’s planned COLA offer until the previous night, President Albright and Mr. Brezski appeared before the Retirement Board and explained that a reduction in annual pension funding payments would not imperil the pension fund or any retiree benefits. It would delay full funding of the pension fund until 2032 or 2033. The Retirement Board seemed skeptical. President Albright explained that their proposal was a starting point for discussion. The Board was much more receptive to Mayor Fuller’s offer of the COLA proposal.

Concerned about the Retirement Board’s response, President Albright called a special Meeting of the Whole for 8AM on Thursday, April 6, explaining the chain of events and noting that the Retirement Board was meeting that afternoon to vote on a pension funding reduction plan augmented by the Mayor’s Cost of Living Adjustment (COLA) proposal.

Finance Chair Grossman led the discussion, inviting Mr. Brezski to explain possible strategies for reducing the current Pension Fund growth rate of 9.6% to 3.5% and complete the process by 2032 or 2033. In his presentation (slides), Mr. Brezski included provisions for the COLA, which would increase retirees’ benefits by $30 per year in 2024, up to $90/year in 2026.

Councilor Lenny Gentile pointed out that the COLA increase was minimal, more symbolic, and not a responsible option in the long term. He argued that it was the Council’s obligation to ensure the solvency of the retirement system. “Be sure you have all the numbers before you lock yourself into a position,” he said. Mr. Brezski responded that they will not have the actuarial numbers until May. Vice President Lipof explained that COLA was on the table because the Mayor put it there. To the point that the schools need more money, Councilor Gentile, a former Newton School Committee Chairman, responded that the Newton School budget had increased from $227.5 million to more than $261 million in that last five years.

Councilor Crossley commented that “it’s clear to me we crowd out more services if we continue to maintain this (9.6%) rate of increase.” She likened the process to taking out a mortgage based on age and ability to pay and supported the 3.5% benchmark because it preserved funding at a consistent rate of growth. Councilor Crossley also praised the Fuller and Warren administrations for addressing the Pension Trust and providing a predictable funding mechanism to sustain it.

Councilor Oliver likened the request to reduce current Pension Trust funding to a 401K: when you have the money you pay in, and when you need food on the table, you withdraw some.

Councilor Grossman asked the members (twenty-three of the twenty-four members were present) to vote to hold the item for further discussion, noting that Mayor Fuller had asked the Council to delay budget considerations beyond May 1st. The vote to hold was unanimous. (See NewTV’s video of the meeting.)

The GLAM committee has met with the Mayor since the Retirement Board meeting, but according to President Albright, the Mayor did not reveal the extent of her budget plan. Vice President Lipof noted the process “has been complicated,” and that the GLAM Committee had been meeting for eight months, repeatedly asking Mayor Fuller to go to the Retirement Board to request a reduction in the Pension Trust annual appropriation. When the Mayor finally did go before the Board, the Committee was taken by surprise and did not have time to evaluate the plan or offer an alternative. Still, he said, “the Retirement Board came back with something. We wanted to be collaborative,” Mr. Lipof said, adding, “We may not be done with the conversation.”

For her part, Mayor Fuller observed that the ongoing financial issues created by the pandemic and downturn in the market have been problematic for people’s physical, mental, and financial health. It has been a difficult time,” she said, and she has faced “a lot of moving parts: preserving the City’s aaA bond rating, the school budget, and other City needs.” She said that she likes to listen to ideas and collaborate to “find a way to yes.” She noted that she listened very carefully to the GLAM group and Mr. Brezski’s analysis, as well as listening carefully to the Retirement Board and parents. Her goal is a “win-win-win for everyone,” and she praised the GLAM committee, Mr, Brezski, and Retirement Board Chair Tom Lopez, saying they have been “collaborative and generous with their ideas.” “I will always be working with the City Council and the School Committee,” she said, noting that “we are now in recovery mode.” Mayor Fuller promised to deliver her budget on time, on Monday, May 1, and she will be discussing her proposal with the Council going forward.