Funding Retirement System Will Save Money Later, Won’t Help Schools Now

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The Fiscal 2015 budget includes $12 million to fund the shortfall in the retirement system, but in a few years it will reap $32 million in savings.

Like all communities in Massachusetts, Watertown has an unfunded liability in its retirement benefits and the difference must be made up. The town now funds about 68 percent of the benefits, and needs about$53 million to fully fund it.

The town had been working toward funding the shortfall by 2022 by paying in about $10 million a year, but last year the Watertown Retirement Board – at the request of the Town Council – voted to accelerate the funding of the shortfall.

Each year from Fiscal 2015 to 2018 Watertown will pay an additional $1.575 million toward funding retirement benefits – meaning the town will pay in $12.2 million in Fiscal 2015 and keep adding until it pays $16.9 million in Fiscal 2018. In Fiscal 2019 the additional payment will be $771,665, brining the total to $17.7 million.

In Fiscal 2020, however, the town will pay in $2 million, which will be about the same amount after that, said Town Auditor Tom Tracy, who is on the Retirement Board.

“By adopting the funding scheduled it will be fully funded by 2019,” Tracy said. “It will result in $32 million in savings.”

While the money will be saved in future years, it does not free up money this year to be used this year.

Some Councilors hoped to find money to move over departments that could use it, such as schools. The schools will received $2.267 million, or 6.18 percent, more than the Fiscal 2014, under Town Manager Michael Driscoll’s budget proposal. School Superintendent Jean Fitzgerald said that the district needs $6 million more – a 16.81 percent increase – to provide a quality education.

Councilor Aaron Dushku asked if any of the $12.2 million planned for the funding retirement could be moved to the schools, but Tracy said the said the plan adopted by the Retirement Board was approved by PERAC (Public Employees Retirement Administration Commission). The next time the payments can be altered could is Fiscal 2016.

Paying off the unfunded retirement benefits should be a priority, Councilor Vincent Piccirilli said. Doing so will free up money down the line and will help create a sustainable budget not just for a year but for many years.

Town Council President Mark Sideris said he will support the schedule for paying off the unfunded benefits.

“Personally I think it is important for the community. And it is important for retirees,” Sideris said. 

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