Think the national debt is cause for concern? There are debt costs closer to home to worry about as well.
The Pioneer Institute, a Boston public policy think tank, recently issued a report examining the status of public employee pension funds in cities and towns across the state. To no one’s surprise, it is not a pretty picture.
Public pensions in Massachusetts are woefully underfunded. As of 2010, the total public employee pension obligation — the amount that has been promised to public employees — was $92 billion. But the amount available in public pension funds to meet those obligations is short by nearly $31 billion — that’s right, billion.
Massachusetts law requires that public pensions be fully funded by 2040. If the rate of return from pension fund investments does not meet their often overly rosy forecasts, taxpayers will be left to make up the difference.
Most cities and towns set aside money each year for this purpose, and a citizens action group in Manchester, headed by William Shipman, has been especially effective at raising awareness of this growing financial need.
But, for all the advantages of Gloucester’s new firefighters contract, for example — including a new rotation system that will keep fire stations open through schedules that raise firefighters’ weekly hours — those added hours will add up to added accrued pension costs down the road.
It’s time that all cities and towns give these still rising costs the attention they need, before it’s too late.