AUSWR
The Association of U S West Retirees
 

 

 

9 ex-officials want boost to their state pensions, too
Bulger ruling sparks requests for thousands

By Matt Carroll, Globe Staff
Boston Globe
Sunday, December 17, 2006

A number of prominent retired state officials have quietly requested boosts in their state pensions in recent weeks, aiming to capitalize on former University of Massachusetts president William M. Bulger's successful legal battle to increase his pension by $17,000 last month.

The nine retired officials, including former House speaker David Bartley and Marie Parente, a 26-year state representative, are seeking pension boosts of anywhere from a few thousand dollars to about $14,000 annually, according to calculations by the Globe.  If they prevail, state Treasurer Timothy P. Cahill said, they could trigger a flood of similar requests, at potentially significant cost to the state.

Last month, Bulger won a significant victory after a three-year legal fight, during which he argued that his pension should be calculated not just on the basis of his salary, but on his broader compensation package, including a $29,000 annual housing allowance and a $19,000 annuity.  State employees receive pensions of up to 80 percent of the average of their top three earning years.

The state's Supreme Judicial Court said Bulger could include the housing allowance but not the annuity, increasing his pension to $196,000.  Now, the other former officials are asking the state retirement board to include a range of other benefits in their compensation.  In addition to housing allowances, they want travel reimbursements, office stipends, a state car, and even a state parking space to be included in their pension calculation.

"If Billy Bulger is going to get it, I should get it, too," said Peter M. Mitchell, a retired president of Massachusetts Maritime Academy who receives a $39,000 annual pension.  Like Bulger, Mitchell is seeking to include his $15,000 annual housing allowance.

Bartley, who was president of Holyoke Community College after leaving the Legislature, is also seeking to add his housing allowance, which was $18,000 a year, to his compensation base.  That would mean a jump in his pension from $137,566 a year to about $152,000.  He declined to comment for this article.

Bartley, who retired in 2004, would also be eligible for retroactive payments, as would the others.

Parente said money she received for travel, office expenses, and the value of a State House parking space should be included in her pension, which would boost it by about $8,000 to an expected $60,000.

"I feel I earned my retirement," said Parente, who worked in the public sector for about 35 years and is leaving the Legislature in January after losing her bid for reelection this fall.

The five-member state retirement board, chaired by Cahill, is expected to rule on the requests in the coming months.  But they may ultimately be decided by the courts as employees appeal, as Bulger did, to seek clarification of what can legally be included as compensation.

The state law regarding public employee pensions states that a pension should be based on "salary, wages, or other compensation in whatever form, lawfully determined for the individual service of the employee by the employing authority," but should not include bonuses, overtime, or severance pay.

In the Bulger case, the SJC ruled that his housing allowance should be counted as compensation because the trustees who renegotiated his contract in 1998 made it clear that they were using the housing allowance to enhance Bulger's overall financial compensation, even though they knew Bulger intended to reside at his longtime home in South Boston rather than spend the money on housing.

"According to the chairperson of the trustees who was responsible for negotiating Bulger's compensation package in 1998, the trustees felt at that time that Bulger had done an outstanding job as university president and considered Bulger's acceptance of a housing allowance as an important enhancement of his compensation package that would motivate his interest in the presidency for an additional five-year term," the decision stated.

Cahill, who fought the Bulger challenge, said he worries it has opened a Pandora's box that could lead to thousands of state employees seeking pension increases.

Compensation should be defined as pay alone, said Cahill.  The Bulger ruling made the definition far murkier.

"Who knows?" Cahill said.  "It could open the door for virtually anything."

Others are more skeptical.  Alden Bianchi, a lawyer who is co-chairman of a Boston Bar Association committee on pensions, said the question to be decided is how broadly interpreted the Bulger case will be.  While Bianchi does not believe the ruling would necessarily open wide the floodgates, he said "it invites challenges on other types of expenses."

The state will have to aggressively contest employees' appeals to limit the ruling's impact, he said.

Michael Sacco, an attorney for retirement boards across the state, said he does not expect that many retirees, other than college presidents with housing allowances, would be able to boost their pensions by claiming extra compensation.

"There may be a flood of claims, but I don't see retirement boards, or the administrative agencies that review claims, or the courts embracing all these extraneous benefits and turning them into regular compensations," Sacco said.

Cahill would like to see legislation enacted that would more clearly define compensation.  But he acknowledged it would be hard -- given requests like Parente's -- to ask the Legislature to more tightly restrict a law that would ultimately apply to many of its own members.

"It is going to be an uphill fight," said Cahill.

Because he has no way of knowing how many people potentially could seek to raise their pensions, Cahill declined to speculate on the ultimate financial impact on the retirement fund, which has about $18 billion in assets, 51,000 retirees, and 82,000 active members.

Pensions are determined by age, years of service, and pay.  Employees pay from 5 to 9 percent of their salary to help fund their retirement.  State employees do not receive Social Security for their work in the public sector.

Thomas R. Kiley, Bulger's attorney, argued that the ruling was narrow in scope and will ultimately apply to only a handful of people.

The average state pension is about $23,400.  The median is about $19,400 .

Parente, who is 78, said she paid taxes on her expenses as income, so they should be included as part of her pension calculation.

"I don't think it's fair" if after she counted it as income the state now says it shouldn't be included when figuring her pension, said Parente.

She received between $3,000 and $4,000 annually in travel money, known as per diem pay, which covers a legislator's commuting expenses from the district to Boston.  And she also was given $7,200 for office expenses.  She also claimed $1,260 in income each year as the value of a State House parking spot.

Parente said she was advised by her accountant to pay taxes on the additional compensation, including the parking spot, and said she has a memo from the state directing legislators to declare the parking space as income.

Based on an approximate annual value of $10,000 for the items, the money would increase her pension about $8,000.

Gail E. Carberry, 58, president at Quinsigamond Community College, wants the board to figure in her $15,000 housing allowance, which would eventually add $12,000 to her pension when she retires.  Carberry, who earns about $105,000 a year, said has no intention of retiring soon.

"I would not have taken the Commonwealth to court, as did Mr. Bulger," she said.  "On the other hand, if the benefit is equally payable to presidents throughout the system, neither do I want to be on the nonreceiving end."

Others who filed for pension increases include Bryan Blanchard, former president of Berkshire Community College;  Eileen Farley, former president of Bristol Community College;  Thomas N. George, a former state legislator;  Maurice O'Shea, former interim president of Bunker Hill Community College;  and Andrew Scibelli, former president of Springfield Technical Community College.

Matt Carroll can be reached at mcarroll@globe.com.  

http://www.boston.com/news/local/articles/2006/12/17/9_ex_officials_want_boost_to_their_state_pensions_too?mode=PF