Lots of sizzle, but not much steak. That’s the best way to describe the narrow focus by legislative leaders and Gov. Deval Patrick on a pension perk that has been seized on by a handful of former legislators over the years.
An obscure law has allowed state legislators who are defeated for reelection or simply decide to leave office on their own to begin collecting a hefty pension before age 55, as long as they have 20 years in the state system. CommonWealth first wrote about lawmakers grabbing these early pensions in 2002, and it is well past time to get rid of this perk the Legislature voted to give itself back in 1950.
But the understandable public outrage over legislative self-dealing has obscured a much bigger problem that current reform proposals do nothing to curb. While lawmakers and the governor squabble over whether elimination of the early pension benefit should apply to current legislators or only to future lawmakers, their proposals leave in place a broader statute that allows all other state employees to cash in on early pensions if they are fired or their position is eliminated. More than 1,000 state workers have tapped the rich pension benefit in recent years, and the circumstances surrounding many of the claims represent a gaming of the system at best, pension fraud at worst.
The so-called termination pension has been justified as a means of protecting long-term state workers from being let go and replaced by patronage hires when a new administration takes power. What it has meant in practice is that cabinet secretaries and other high-level officials — many of them former legislators — who were able to ride political connections up the ladder to top-paying jobs have been able to cash in and begin collecting lucrative pensions while still in their 40s or early 50s.
Robert Durand, a one-time state senator who served as environment secretary under Gov. Paul Cellucci, did just that. In January 2003, when incoming Gov. Mitt Romney chose to replace him, Durand, then age 50, put in for a termination pension and began collecting $43,229 a year while he started a consulting business. Timothy Bassett, another former legislator, was appointed in the mid-1980s by then-Gov. Michael Dukakis to head the Massachusetts Government Land Bank. When Gov. William Weld opted to replace him 1996, Bassett, then 47 years old, not only received $212,000 in severance pay from the agency, he applied for and was granted a termination pension of $38,419 a year.
Gov. Patrick seemed poised to take on the issue, but he has now abandoned a vow he made less than two months ago to push to end the perk. In March, as he was being pilloried for trying to engineer the appointment of state Sen. Marian Walsh to a $175,000-a-year job at a state authority that had gone unfilled for more than a decade, Patrick called an unusual Sunday press conference to lay out his agenda for pension reform. A press release outlining his priorities included a call to eliminate the termination pension for all state employees. Two weeks later, however, with little attention paid to it at the time, Patrick abandoned his position when testifying before the committee considering pension reform legislation, calling only for eliminating the benefit for lawmakers. According to his prepared testimony, Patrick simply said the state should “tighten up the rules” for all other state workers.
Administration officials say they now believe termination pensions should remain in place for non-legislators, though not for cabinet secretary-level positions, and that the governor wants a pension reform commission, which recently began meeting, to explore ways to limit their use.
It’s an astonishing retreat, given the state’s grave fiscal condition and Patrick’s effort to trumpet his reform credentials. Generous lifetime pay-outs to those in their 40s and early 50s are a benefit unheard of in the private sector, and they should be eliminated in state government, says Michael Widmer, president of the Massachusetts Taxpayers Foundation. “It’s a huge abuse with absolutely no justification whatsoever,” Widmer says of the fire-me-and-I-win pension windfall. “All they do is eliminate it for elected officials, who have been the most visible ones,” he says of the legislation now pending. “But the most extensive abuse has been in the executive branch.”
Indeed, not only have high-level appointees in the executive branch exploited the pension perk, there is reason to believe there has been widespread abuse of the law at all levels. In 2002, CommonWealth reviewed over 1,100 termination pensions granted over the previous decade. In one-third of the cases, the worker had passed the 20-year qualifying threshold by less than a year. In 10 percent of all cases, the “firing” or elimination of a job came within a month of the 20-year mark. One example: Susan Costello, a rising Republican Party activist, whose position as an assistant secretary of human services was conveniently eliminated by the Weld administration in 1996, two days after she reached 20 years in the state system. Costello began collecting a yearly pension of $28,814 — at age 42. Costello hardly looked like a victim of changing political winds on Beacon Hill, however, as she promptly went to work at the lobbying firm headed by then-Gov. William Weld’s former chief secretary, John Moffitt.
State Treasurer Tim Cahill, who oversees the state retirement board, told CommonWealth in 2004 that he would propose reforms to rein in use of termination pensions. He concedes now that he has not done so. “We backed off,” says Cahill. “We got a lot of push back from the Legislature. I wasn’t interested in getting on everyone’s bad side just to file something that wasn’t going anywhere.”
One lonely voice in Legislature has been freshman state Rep. Jim Arciero. The Westford Democrat filed legislation to do away with termination pensions. “This gravy train has got to end,” he says.
But with Patrick backing away from his intitial stand and the Legislature showing no appetite to begin with for a wholesale elimination of the termination perk, it’s hard to know what it would take for state leaders to bring policies for state workers in line with the way the rest of the world works. “Look how much trouble we’re having getting things done in this fiscal meltdown,” says Widmer. “The worst conditions imaginable, and it’s still a very weak pension bill.”
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5/13/09 UPDATE: Several readers, including state Sen. Robert Hedlund’s communications director, Rick Collins, have pointed out that a Republican-sponsored amendment to the Senate pension reform bill would have eliminated termination pensions for all state employees. The amendment was defeated 23-15, with 10 Democrats joining with the Senate’s 5 Republicans in support of abolishing termination pensions.
