Connect with us

Massachusetts

Pensions vs. classrooms: Rising retirement costs are squeezing Massachusetts education – The Boston Globe

Published

on

Pensions vs. classrooms: Rising retirement costs are squeezing Massachusetts education – The Boston Globe


While standardized test scores of Massachusetts students are still mostly below pre-COVID-19 pandemic levels, one education statistic that keeps rising is the cost to the state of funding teachers’ pensions.

In a new report on pension costs across six populous states including Massachusetts, we found that in the Bay State, 14 cents of every tax dollar dedicated to associated education spending went to pensions in 2022. That’s up from 9 cents in 2015 and far above the 8 cents forked over by taxpayers in our runner-up state, California.

Despite this increase in resources, the financial strength of the Massachusetts Teachers Retirement System hasn’t improved. Over this period, the percentage of assets the fund has relative to the value of its pension commitments remained consistently low, increasing from just below 57 percent to just below 58 percent.

Yes that’s right, MTRS has less than 58 cents saved for every dollar it owes, even under its assumption of a 7.15 percent return on investments every year. To put that in perspective, MTRS would consider a $100,000 payment due in 10 years as “fully funded” if it had just over $50,000 in its account today. And yet, this eye-popping increase in cash has barely kept MTRS treading water. This means that without policy reforms, Bay State taxpayers will probably pay an increasingly hefty bill.

Advertisement

While the MTRS funding ratio and contribution increases are worse than its peers, these trends reflect a nationwide problem. Public pensions when properly measured are underfunded to the tune of $5.12 trillion, and the cost burden on state and local governments is increasing.

To understand how the contribution increases impact education, consider that Massachusetts’ current education budget for fiscal 2024 is $7.95 billion. The fact that pension contributions have increased by 5 percentage points translates into $398 million per year of additional money going into the fund than if the share had remained at its 2015 level.

This means that the state has $398 million fewer dollars per year to dedicate to important expenditures such as salaries for new teachers, classroom resources, or support services such as counselors, technicians, or librarians.

State revenues generally rise of course, as they have in recent years, giving the state more money at its disposal to offset these increases. For example, while pension contributions per pupil in Massachusetts have risen by 109 percent since 2015, revenues per pupil have increased by 21 percent, softening the blow.

Yet this pace of revenue growth is not guaranteed. While Massachusetts fiscal 2025 budget foresees a $2 billion or roughly 3.5 percent spending increase, the incremental revenues are coming mostly from the significant Fair Share tax increase. Money to fund education, pensions, and other public priorities does not grow on trees. It comes out of taxpayers’ pockets.

Advertisement

Massachusetts officials could address the pension challenge through one key policy change: moving new employees from traditional defined benefit plans to defined contribution plans similar to 401(k)s.

Current teachers typically receive pensions based on a formula that uses a series of inputs including employees’ salaries, the ages of the employees, and the number of years of employees’ service. If an employee leaves their job, pension benefits are reduced or lost.

401(k)-type plans conversely require the state to contribute a flat percent of pay to a tax-deferred account as long as the employee is working in the job. Employees who leave the job can take their full accumulated retirement savings with them, and the state avoids the creation of more long-term obligations.

The mobility of 401(k)-type plans could attract more young people to the teaching profession, since they often prioritize flexibility early in their careers. While public sector defined benefit plans tend to be more generous than private sector 401(k) plans, that difference can be reduced by offering higher employer contributions. This setup would vastly improve the state’s finances while ensuring that retirement contributions do not continue to consume ever-increasing shares of education budgets.

Ultimately the burden of pension contributions will threaten the Commonwealth’s ability to remain a national leader in education. It would serve the state and its valued teachers well to move to a more sustainable model for retirement benefits before it’s too late.

Advertisement

Joshua Rauh is a professor of finance at the Stanford Graduate School of Business and senior fellow at the Hoover Institution. Gregory Kearney is a senior research analyst at the Hoover Institution.






Source link

Massachusetts

Healey shares plan to limit health insurance cost increases for Massachusetts residents

Published

on

Healey shares plan to limit health insurance cost increases for Massachusetts residents



Gov. Maura Healey said Thursday that the state is spending an additional $250 million to limit premium increases for residents who have insurance through the Massachusetts Health Connector.

After Congress let Affordable Care Act tax credits expire at the end of last year, more than 300,000 people in Massachusetts have been facing a potentially steep increase in their health care bills. 

The governor’s office said those enrolled in ConnectorCare who make below 400% of the of the federal poverty level, which is $62,600 for an individual or $128,600 for a family of four, will see “little to no premium increases.”

Advertisement

Under the plan, Healey’s office said a 45-year-old couple with two kids in Fall River will see their monthly health insurance costs rise from $166 to $206. Without the new funding, the governor says they would be paying $452 a month.

“While President Trump continues to increase health care costs, we are taking the strongest action in the nation to address them and keep costs as low as possible for families,” Healey said in a statement. “Despite this increased state investment, far too many people will still see their premiums increase because of the White House.”  

The U.S. House of Representatives is set to approve a three-year extension of the health care tax credits. While it appears unlikely to pass the Senate, senators have talked about a compromise plan that could include a two-year extension with added reforms. President Trump hasn’t offered a specific health care plan, but said subsidies going to insurance companies should “go to the people” instead. 

The $250 million is coming from the Commonwealth Care Trust Fund, which gets its money from employer medical assistance contributions and financial penalties from residents who violate the state’s health care insurance mandate. 

Massachusetts residents can sign up for health insurance coverage or switch their Health Connector plans until Jan. 23 if they want to be covered by Feb. 1. 

Advertisement



Source link

Advertisement
Continue Reading

Massachusetts

Minnesota childcare fraud allegations spark audit request in Massachusetts: ‘Serious risks’

Published

on

Minnesota childcare fraud allegations spark audit request in Massachusetts: ‘Serious risks’


Fraud allegations in Minnesota’s childcare system are prompting two Massachusetts Republican lawmakers to ask the Healey administration to conduct a “top-to-bottom audit” of a Bay State voucher program.

State Reps. Marc Lombardo, R-Billerica, and Nicholas Boldyga, R-Southwick, say they’re alarmed after seeing national reports of fraud in childcare subsidy programs, pointing specifically to widespread allegations in Minnesota.

Their concerns have prompted them to ask Gov. Maura Healey to direct Education Secretary Patrick Tutwiler to “urgently conduct” an audit and review of the Massachusetts Child Care Financial Assistance program to identify any potential fraud and vulnerabilities here.

Child Care Financial Assistance helps low-income families pay for childcare in Massachusetts.

Advertisement

“While Massachusetts has not yet been directly implicated in the same manner, the similarities in program structure, relying on voucher reimbursements to providers for low-income families, raise legitimate questions about whether comparable fraud or waste could be occurring here undetected,” Lombardo and Boldyga wrote in a joint letter to Healey on Wednesday.

“Our Commonwealth invests hundreds of millions of dollars annually in this critical program to support working families and early education,” they added. “We owe it to Massachusetts taxpayers and the families who genuinely need this assistance to ensure every dollar is spent appropriately and reaches its intended purpose.”

The governor’s office did not immediately respond to a Herald request for comment on the letter.

Early Education and Care Commissioner Amy Kershaw has said that Massachusetts is not facing disruption to its $293 million share of federal childcare payments amid a nationwide freeze in response to the Minnesota fraud allegations.

Kershaw has also added that Child Care Financial Assistance is not being impacted, either. The state appropriates funds for the voucher program at the beginning of the fiscal year and then seeks federal reimbursement.

Advertisement

This fiscal year’s funding totals about $1.087 billion for the program, which covered more than 66,000 children in fiscal year 2025, according to a December report from the Massachusetts Taxpayers Foundation.

“Obviously, we are incredibly concerned about families across the country and in Minnesota who may lose access to Child Care Financial Assistance based on acts by the federal government,” Kershaw told Bay State childcare stakeholders on Monday.

Before the new year, the federal Administration for Children and Families froze all funding to Minnesota. All 50 states must now provide additional verification before receiving more funds.

Minnesota Democrats accuse the Trump administration of playing politics and hurting families and children as a result.

This all comes after a video surfaced on YouTube alleging fraud in childcare in Somali communities in Minnesota, to which Kershaw has said none of the allegations have been proven.

Advertisement

The Massachusetts early education and care commissioner noted how there have been similar videos posted in Massachusetts and other states like Ohio, California and Washington.

In their letter to Healey, Lombardo and Boldyga also highlighted how the U.S. Department of Health and Human Services has responded to the Minnesota allegations by closing loopholes that allowed payments without verifying attendance.

“These developments highlight serious risks in subsidized child care systems across the country,” the Republican lawmakers wrote, “including the potential for misappropriation of taxpayer funds on a massive scale.”

Lawmakers across the country are seeking similar reviews as Lombardo and Boldyga. In Michigan, State Senate Minority Leader Aric Nesbitt, a Republican, has asked for an audit of a state program that aims to help low-income families afford childcare there.

The Massachusetts audit would zero in on verifying that voucher payments to providers are based on documented child attendance records; cross-checking to detect potential “ghost children” or overbilling; and on-site inspections of voucher-receiving providers to confirm they are operating legitimate childcare programs, among other objectives.

Advertisement

“Such a thorough review would not only safeguard public funds,” Lombardo and Boldyga wrote, “but also strengthen confidence in a program that is vital to thousands of Massachusetts families.”

The Associated Press and Herald wire services contributed to this report.



Source link

Advertisement
Continue Reading

Massachusetts

Massachusetts police officer struck and killed in line of duty; department mourns

Published

on

Massachusetts police officer struck and killed in line of duty; department mourns


A Massachusetts police department is mourning the death of one of its own after an officer was struck and killed while attempting to assist a broken-down driver on a highway.

The Uxbridge Police Department has hung black bunting above its main entrance as it receives condolences from across the Bay State following the incident early Wednesday morning.

The crash unfolded at about 12:45 a.m., when the officer was trying to help a motorist in the northbound lanes of Route 146, a main artery in the Worcester County town that borders Rhode Island.

Authorities identified the fallen officer on Wednesday afternoon as Stephen Laporta, 43, of Uxbridge. The Massachusetts State Police is investigating the crash.

Advertisement

“This is a devastating loss for our department and our community,” Police Chief Marc Montminy said in a statement. “Our thoughts and prayers are with the officer’s family, loved ones, and fellow officers during this incredibly difficult time.”

Gov. Maura Healey has ordered flags to be flown at half-staff at all state buildings in honor of LaPorta.

“I am heartbroken over the news of Officer Stephen LaPorta’s passing,” the governor said in a statement Wednesday afternoon. “He knew he was headed into a dangerous situation when he responded to the scene of a multi-vehicle crash, but like all of our officers do day in and day out, he put the public’s safety first – and he tragically made the ultimate sacrifice.”

Authorities closed Route 146 for hours after the crash, with investigators working the scene. The icy, frozen road reopened around 10 a.m.

Uxbridge First Holy Night, a community organization, offered its condolences to the department via social media, saying the loss is also felt “across our entire town.”

Advertisement

“Our officers are more than public servants — they are neighbors, friends, parents, children, and family,” the group stated. “When one of our own falls, we all grieve together.”

“Uxbridge is a close-knit community,” it added, “and in moments like this, we lean on one another. May we surround this family and our police department with compassion, strength, and support in the days ahead.”

Police departments from across the region sent cruisers to participate in a procession that accompanied a vehicle carrying LaPorta’s body to a medical examiner’s office before daybreak.

The Boston Police Patrolmen’s Association described the officer as a “fallen hero” and the death as “heartbreaking news.”

“Another police officer killed in the line of duty. This time in Uxbridge,” the association stated in a social media post. “The officer was involved in a motor vehicle crash while attempting to assist a motorist on Rte. 146 early this morning. Our thoughts and prayers are with the officer’s family and the entire Uxbridge Police Department during this incredibly difficult time.”

Advertisement

State Rep. Mike Soter, whose Central Massachusetts district includes Uxbridge, said his “heart sank” when learning of the death.

“This is so close to home,” he said in a Facebook post. “May GOD watch over this officer’s family and his fellow officers today as they need our strength as a community. May the officer’s memory be eternal always!”

In June 2024, the Uxbridge Police Department celebrated LaPorta’s promotion to full-time patrolman.

“He may seem familiar to you all because Ofc. LaPorta has already been actively serving our wonderful town as a full-time Dispatcher and working part-time patrol shifts,” the department stated in a Facebook post. “He has put in the work to switch his role up and come to the patrol side full time! Let’s give him a warm congrats Uxy!”

Uxbridge Police Department (Herald file photo)
Advertisement



Source link

Continue Reading

Trending