The MBTA pension system operates like a Ponzi scheme

– News and commentary covered by Quincy Quarry News.

 

All the about the Ponzi Express!
A Boston Globe image

The MBTA pension system operates like a Ponzi scheme.

 

At least so says the Boston broadsheet per a recent editorial.

 

That and how in the face of the MBTA proposing yet another round of fare hikes, the Boston broadsheet also says it is time for the agency and union officials to reform an unsustainable pension system that has been heaped upon the backs of riders and taxpayers.

 

Bon voyage!
A transit map graphic

Related article: Mark T. Williams: MBTA pension crisis should be a priority

 

No argument, the MBTA employee pension fund is woefully underfunded as well as that T employee enjoy all sorts of out of the ordinary consideration as regards their benefits.

 

At the same time, however, Quincy’s City Hall would likely be ecstatic to have the T’s said to be perhaps probably in the 50% to 60% funded level versus its actuarial pension obligations.

 

A City Hall renovation that ran over over budget.  Way over budget.
An iconic Quincy Quarry image

When the Koch Administration first came into office, the City of Quincy’s employee pension funding level was in the mid 60% range. 

 

Granted, the mid-60’s range is not great, however, such was still better that the current at best mid-40% range per the state Public Employee Retirement Administration Commission. 

 

Way better.

 

Wicked way better.

 

Look out below!
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Editor’s note: a 60% funded level is viewed as a yellow flag level of concern, 50% a red flag situation and in the 40% range is basically black hole territory.

 

In fairness, the Crash of 2008 took a bite out of the City’s pension fund portfolio.

 

On the other hand, most other Massachusetts municipal pension funds have rebounded and then some given the stock market’s recovery and its then soaring on to new stratospheric record levels.  

 

The stock market bites
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Quincy, however, has seen its funded level stay stuck in the but mid-40% funded range since 2009. 

 

Given the Crash of 2008, the Koch Administration subsequently opted to secure approval to stretch out its obligation to fully fund the city’s pension fund by roughly a decade given special legislation enacted in the wake of the Crash of 2008. 

 

Such comes at a cost, however. 

 

What goes up also often comes down
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Think pay now or pay a lot more latter. 

 

That and kicking the can down the road.

 

The resultant City of Quincy annual budget line item payment towards perhaps making the city employee pension fund whole by 2037 was just short of $31 million for Fiscal Year 2019, roughly 10% of the total 2019 budget spending.

 

Up in smoke
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Even more problematic, however, is how the City of Quincy’s annual pension funding outlay is slated to increase by roughly $2.5 million or more each and every year until it tops out at $75 million in 2036 when the city’s employee pension fund is supposed to be fully funded.

 

By contrast, City of Boston is only paying out a set annual payment of just short of $15 million until only 2025 to fund its many-fold greater pension obligations.

 

The beat goes on so duly beat it down!
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The reason for the difference: Boston has done its best to duly funds its pension obligation as aggressively as well as early as possible.

 

A few more metrics.

 

Absent new development and remodeling activities which increase local property tax revenue, ceteris paribus a $2.5 million annual increase in budget spending by the City of Quincy currently works out to requiring a bit over a $60 increase on the average homeowner’s property tax bill to cover the nut. 

 

Follow the money
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Each and every year.

 

Also, after taking out the currently roughly four hundred Quincy public school teachers from the mix as they are members of the state teachers pension fund and which is much better financial shape, the amount of money paid out by the City of Quincy to fund its employee pension benefits obligations is more, if not a whole lot more, than what the T pays out after one duly figures things on a number of employees basis.

 

They’re in the money!
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Fortunately for City of Quincy employees, local taxpayers are obligated to make sure that city employees receive their full pension benefits. 

 

For local taxpayers who have to cover the nut, however, not so much.

 

Source: Editorial: MBTA pension system operates like a Ponzi scheme – The Boston Globe