Two Things to Ponder About Quasi-Public Salaries
As the Governor continues his march through the quasi-publics (many of which have taken him a full term to gain control over), it is worth mentioning two key points that were raised in the compensation review done by UMASS’ Steve Crosby.
First, the report emphasizes that, for all the kerfluffle raised by the various quasi-public boards about independent studies and ‘market compensation’ rates, a troubling number of these hires came from the local market.
In the words of the study:
“..with almost no exceptions, the individuals hired to run these agencies are hired locally and not from a national pool. Does it make sense to use national standards and then hire locally?”
Next is a point that I made in my testimony to the study group — for those quasi-public entities in the MA state retirement system, the value of the pension is huge for people coming from within the system and probably has negative value for those coming from outside.
Put another way, the state pension system offers huge rewards to those members who reach 20 years of service and retire after age 55 at the six figure salaries (a few in excess of $300k) available at the upper levels of these quasis. If you don’t hit the 20 years of service mark, your payout is greatly reduced or eliminated.
Ponder two mid-career professionals who are candidates for a quasi-public CEO job, one is an in-state candidate with 12 years of service and the other is in a similar job out of state. The first candidate’s compensation package would include the very real possibility of retiring with a pension worth 80% of the average of the top 3 years of salary. The second candidate realizes no such value. There’s a huge difference between the two.
It was clear to the study group, that no one has really considered this to be an issue in the past. In fact, none of the costly compensation reviews conducted for the various boards at the quasis by outside consultants had even bothered to include retirement benefits in their analysis. If retirement benefits aren’t compensation, what are they?