NH Retirement System reform may hit cities and towns

Shira Schoenberg leads her Capital Beat column in the Concord Monitor with some good old fashioned, green eyeshade, public policy reporting on the problems facing the New Hampshire Retirement System.

Actuarial consultant Gabriel, Roeder Smith & Co. is recommending that the retirement system raise the rates for employer contributions by an average of 22.68 percent in 2011. The increase would be lowest for state employees and highest for local police officers, firefighters and teachers.

"This is going to be a good-size hit on (municipalities') budgets," said Barbara Reid, government finance adviser for the New Hampshire Municipal Association.

Dean Michener, director of governmental relations for the New Hampshire School Boards Association put it this way: "This kind of increase is just not sustainable."

Don't worry. She's got plenty of the campaign tidbits that make the column a must-read for political junkies as well.

Arlinghaus on your TV

Well, if you live in the Manchester area anyway. Charlie Arlinghaus will be talking about the Verizon Wireless Arena bonds and municipal retirement stories this evening on "Two Live Joes" on MCAM, Channel 23 from 8:00 to 8:30.

Retiree hike hits with thud

Tom Fahey reports in the Union Leader on the cost of shoring up municipal pension programs.

Towns, cities, school districts and the state itself could see pension costs for police, teachers and other public workers increase by an average of nearly 23 percent July 1, 2011.

Consultants for the New Hampshire Retirement System yesterday recommended the rate hike. The steep increase stems from a combination of investment losses -- 18 percent for the year that ended June 30 -- and the need to catch up with a long-term funding problem that began building nearly two decades ago.

The rates won't take effect until the NHRS board of trustees formally adopts them in September 2010. At that point, they will become a factor in budget planning for towns and school budgets. A year ago, rates were projected to go up between 25 and 35 percent.

Municipalities had no choice but to sue

The Nashua Telegraph says that New Hampshire cities and town were right to take the state to court over cuts in municipal retirement subsidies, whether or not they win the case.

The state took $50 million from cities and towns in the form of suspended state revenue-sharing payments. That, as far as we know, is resented but not being challenged.

It then handed municipalities a bill for $27 million. That’s the estimated cost of reducing the state’s contribution to public employee retirement funds from 35 percent to 30 percent next year and to 25 percent in 2011. The reduction, which is the subject of an impending lawsuit, will cost Concord taxpayers between $300,000 and $350,000 over the next two years.

The municipalities are right to challenge the state’s unilateral abrogation of a longstanding agreement. They may not win, but given what’s at stake, they must fight the state’s move, one that could have been avoided by raising more revenue.

Time is money in retirement system fix

The Portsmouth Herald has a good grasp of the problems facing the New Hampshire Retirement System. Simply put, "This retirement package is not sustainable and far more generous than public workers receive in many other states, including Maine and Vermont."

August 21, 2009 6:00 AM

Remember Dick Ingram, former president of the Greater Portsmouth Chamber of Commerce?

After a brief stint at The Housing Partnership in Portsmouth, he has become executive director of the New Hampshire Retirement System. If you want to know if that's an easy or tough job, consider this: Ingram is the fifth executive director in the past 24 months.

The NHRS is the pension system for all state workers and most teachers, government employees, police and firefighters. At this time, there are 52,000 active members and 23,000 retirees. While the retirement system is fiscally sound for now, if it doesn't change its policies soon, particularly for police and firefighters, it projects an unfunded liability of $3.4 billion.

This is where Ingram's job gets tough. He can see the problem and make recommendations to fix it, but he doesn't actually have the power to make substantive changes needed to bring pension revenues in line with expenses. That power belongs to the New Hampshire Legislature, which did very little in this last legislative session to bring long-term expenses under control. (more)

State failed to control retirement system cost

The Portsmouth Herald faults the Legislature for failing to address a problem that drawfs the state's budget problem; the New Hampshire Retirement System.

Lawmakers did virtually nothing to bring the system in line with the realities of the times we live in and, in fact, downshifted some of the state's excessive retirement costs onto cities and towns.

This is unconscionable given both the decision to require municipalities through their property tax structure to pay 70 percent of the retirement costs instead of the previous 65 percent and the timing of that decision — after municipal budgets had already been prepared and approved.

NH Budget faces another lawsuit

Lauren Dorgan reports in the Concord Monitor on the latest legal challenge to the New Hampshire budget, this time from state retirees looking to block a new fee on their health care benefits.

The heart of the complaint centers on the way the state is taking the insurance premium, rather than the premium itself: Starting last week, a charge of $65 per single retiree or $130 per couple was deducted directly from the pension checks of hundreds of retired state employees who are under the age of 65.

The retirees claim that the deduction is an "illegal 'encumbrance' and 'diversion' " because the retirees' rights to a full pension payment is "contractually vested," according to a draft version of the lawsuit provided to the Monitor. State and federal constitutions "forbid legislation that impairs vested rights," the lawsuit reads. (more)

$3.4 billion shortfall for N.H. pension

The Concord Monitor's Lauren Dorgan reports on the projected shortfall in the state's pension system:

The sinking economy has taken a billion-dollar bite out of the state's already-ailing pension system, leaving the New Hampshire Retirement System with about 59 percent of what it needs to pay its long-term liabilities, according to preliminary calculations, for a shortfall of $3.4 billion.

Calculations on the state of the system at the close of the 2009 fiscal year, which ended last month, show that the system has $4.7 billion in assets, according to Retirement System Executive Director Dick Ingram. (more)

AP- "No agreement on retirement changes"

The Nashua Telegraph runs an AP story on lawmakers rejecting a public pension reform deal:

A proposal that New Hampshire police and firefighters work an extra five years before collecting retirement benefits has fallen apart in talks among lawmakers.

The bill was meant to help shore up finances at the New Hampshire Retirement System.

The House wanted to change the number of years required to qualify for a full pension as well as the formula on which pensions are calculated, the New Hampshire Union Leader reported.

UL- "25 years instead of 20 to retire?"

Tom Fahey reports in the Union Leader about Senate changes to the state retirement system:

The intent of HB 590 is to have police and firefighters work 25 years instead of the 20-year career the law now requires to receive a full pension, figured at 50 percent of full pay.

When the House passed its plan, it set age 50 as the minimum retirement age. The Senate dropped that while still calling for 25 years of work. It also dropped a House plan to change the pension formula.

The House wanted to limit a pension to half-pay after 25 years of service, the same pension level workers get after 20 years now. The Senate keeps the same formula that is now in place. When it is applied against the full 25 years, the formula gives a retiree nearly 63 percent of pay.

Retirement System Reform back on the table?

Tom Fahey reports that efforts to reform the New Hampshire Retirement System are back on the table, following legislative changes in each of the last two years.

Unions say it's time to stop tinkering with the system, which last summer was $2.7 billion under-funded for its long-term obligations, and let reforms take hold.

"If we keep operating on this patient without allowing time to heal, sooner or later he'll die on the table and I don't think that's something anybody wants," David Lang, president of the Professional Firefighters of New Hampshire, said.

Maura Carroll, legal counsel for the New Hampshire Municipal Association, argued that it makes sense to keep moving. Three years ago, critics said not enough was being done, she noted.

"This doesn't mean you make wholesale changes every year, but that you learn something every year, and if you can make some tweaks to improve the system, you ought to act," she said.

The New Hampshire Retirement System faces two fundamental challenges. It has habitually promised far more generous benefits that it could reasonably provide, and the returns on its investments have been worse than the market average for the past decade. The current economic slump certainly doesn't help, but can in no way be blamed for the shakiness of state pensions.