Despite the overall dismal performance of Massachusetts’s public pensions, there are systems that have done a noteworthy job of reducing their unfunded liability. For taxpayers who contribute to these systems and public employees who benefit from them, this is great news. It means they are less likely to see tax hikes and/or reduced benefits. It’s also great news for future generations who are less likely to have to shoulder the burden of their predecessors’ debt.
While improvements of any kind are praiseworthy, there are a few pension systems that stand-out for significant progress in reducing their unfunded liability. Here are the public pensions with the largest decreases in unfunded liability over the past several years, according to MassPensions:
- Leominster (100%):
Considering our recent blog on the state’s best and worst performers, it makes sense that Leominster tops the list. In 2013, the fund had a $28.9 million unfunded liability. Since then, the city has eliminated its unfunded pension liability, amounting to a 100% decrease between 2013 and 2019.
- Dedham (77.2%):
Up next is Dedham’s pension system, which achieved a 77.2% decrease between 2012 and 2018. During these six years, the fund reduced its unfunded liability from $33.8 million to $7.7 million.
- Shrewsbury (70.5%):
Following close behind is Shrewsbury, with a 70.5% decrease in unfunded liability between 2012 and 2018. In 2012, this system had an unfunded liability of $33.2 million, yet in just six years it reduced the amount to $9.8 million.
- Watertown (60.1%):
Watertown also makes the list, touting a 60.1% reduction in unfunded liability over five years. Between 2013 and 2018, this fund was able to lower its unfunded liability from $60.6 million to $24.2 million.
In addition, Taunton, the Massachusetts Water Resources Authority, and the Massachusetts Port Authority deserve honorable mention. Taunton reduced its unfunded liability by 37.2% between 2012 and 2018, whereas MWRA and MassPort achieved 36.8% and 33.7% decreases, respectively, between 2013 and 2018.
It is imperative for the state and its communities to review the practices of these pension systems. They demonstrate exceptional progress in curbing unfunded liabilities — progress that pension funds statewide should seek to emulate.
Cole Kroninger is a Roger Perry Transparency Intern at Pioneer Institute. He is a rising senior at Hamilton College where he studies Economics.