Committee of the Whole Votes to Approve Retirement Board Pension Proposal at 5/25 Meeting

In the wake of the Operational Override failure on March 14th and after nearly two months of negotiations between the Newton City Council and the Newton Retirement Board, the City Council voted 23-0* to accept the Retirement Board’s proposal to increase funding for the Pension Trust at the rate of 6.6% annually and offer three annual incremental Cost of Living Adjustments, proposed by Mayor Ruthanne Fuller, scheduled to begin this July. At the 6.6% rate of growth, the Retirement Trust will be fully funded by FY 32, eight years before the State requirement of 2040. 

The City Council does not have the authority to set the rate of funding increase. Its vote specifically concerned the three COLA increases thereby certifying the Retirement Board’s decision to agree to the 6.6% rate of funding increase. 

Had the City Council refused the Retirement Board’s Pension plan, the annual rate of increase would have reverted to the original 9.6% and would have had a negative impact on the renovation and construction of the Horace Mann Elementary School.  While the city’s actuary advised the Retirement Board that the three annual COLA increases and a funding rate of 6.2% would still allow the Pension Trust to be fully funded by FY’32, Newton Comptroller Steve Curley, ex-officio Retirement Board member, advised members to increase the rate to 6.6% as a buffer.

A City Council budget working group – known as the GLAM Committee – including City Council Finance Chair Becky Grossman, City Council Vice President Rick Lipof, City Council President Susan Albright, and Ward 4 Council Chris Markiewicz, working with Ward 2 School Committee member Chris Brezski offered a third option.  Their proposal would have added a fourth annual COLA payment and reduced the annual Pension Trust contribution percentage to 5.5%, a proposal that was rejected by the Retirement Board.   Assessing the agreement in a letter to her colleagues, President Albright said, “We will reap the benefit of $48 million freed up cash over the next 9 years.  In addition, and this is important, once Newton has achieved a higher percent of fully funding the pension trust (now estimated to be 62.7%) we should – hopefully in 3 years again ask for a lower rate of growth.”

 Vice President Rick Lipof thanked  Retirement Board  Chair Tom Lopez, who with other Board members attended the meeting, for working with the Council in achieving a sustainable funding mechanism for Horace Mann among other priorities. Chair Lopez assured the Council that the Board are team players and explained that concerns about the possible federal default and uncertain market forces motivated them to a more cautious approach to funding.  However, he left open the possibility for another discussion, if, in the future, the economy is stable and more of the pension has been funded.

In an interview with Fig City News, Finance Chair Becky Grossman, who chaired the meeting, and has been engaged in the budget process for the past year, acknowledged that the last few weeks had been “difficult” but “informative.”  She noted that both the councilors and the public have been given more information which she thinks is a good thing.  At the same time, she underscored the value of working with people who “are creative and have great ideas. It’s a benefit to the city.” she said. 

*Ward 4 at-large City Councilor Lenny Gentile was not present for the vote.