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Public pension funds in Mass. get failing grades

Eighty out of 105 Massachusetts retirement authorities received a failing grade for their progress in covering billions of dollars in future pension obligations, according to a new database of public pension performance. Only one earned an A.

The rankings show that nearly one-third of the state’s towns, cities, and other public retirement boards are less than 60 percent funded — a level the authors at the Pioneer Institute in Boston consider poor. At the bottom of the pack are Springfield, Everett, and Lawrence, which have faced financial struggles and count a large numbers of retirees.

Systems with low-funded ratios are “reflective of bad investments over time, and the crash in 2008,’’ said Joseph Connarton, executive director of the state’s public pension oversight body, the Public Employee Retirement Administration Commission.


PERAC’s annual report data is the source for much of Pioneer’s new website,

MassPensions.com, which is aimed at providing transparency to taxpayers and retirees. The Pioneer Institute is a research group that advocates for limited government and has been pressing for more disclosure of public pension data.

“As a rule of thumb, a pension fund which is 90 percent or more funded is considered in a good condition,’’ said Iliya Atanasov, Pioneer’s senior fellow on finance. “Someone who is 50 or 60 percent funded is considered really bad. Less than that is dismal.”

Springfield is ranked lowest, its pension 29 percent funded, down from a high of 57 percent in 2000. The city has a pension liability of $925.6 million and assets set aside so far of $258.7 million. It has 2,900 retirees and 4,800 active workers.

Springfield’s funding issue is not just a function of poor investment performance years ago, the head of the city’s pension board said, but also the long-term financial travails of the area. “Look at the economy of Springfield,” said Anne Leduc, the executive director.


Springfield shifted oversight of the bulk of its retirement money to the state’s pension manager, Pension Reserves Investment Management, in 2005. Dozens of other communities did the same around 2007, under pressure from the Patrick administration to boost returns.

Many upscale municipalities also are under the 60 percent mark, including Andover, Brookline, and Newton. The only system that’s fully funded is the tiny Minuteman Regional School District in Lexington, with $11.6 million in assets.

The funding of public pensions is a major issue nationally, as states and municipalities with tight budgets delay contributions to the programs. Poor stock market returns over the past decade only made matters worse. Legislators have been slow to embrace politically prickly measures such as cutting benefits and raising retirement ages.

The pension systems peaked in funding progress in 2000, with $18 billion in unfunded liabilities, according to the Massachusetts Taxpayers Foundation. That sum has doubled in 12 years, to $36 billion, said Carolyn Ryan, a policy analyst with the group. Programs like early retirement incentives have cut short-term costs but added to long-term liabilities, she said.

In Everett, the trend is at least moving in a positive direction, according to pension director Robert Shaw. Its 38 percent funded ratio is up from 33 percent in 2006. The city is doing its part to help, having raised its annual appropriation to the fund to $12.5 million from $7 million, and the board is looking to stay on a “pretty aggressive schedule’’ to be fully funded by 2030, Shaw said.


“We’re going in the right direction,’’ Shaw said. “You can’t fix something like this overnight.”

Beth Healy can be reached at bhealy@globe.com.