Gov. Charlie Baker's early retirement proposal for state workers will add nearly $50 million a year to the state's share of the Massachusetts pension system, but administration officials argue the overall budget savings will more than make up for it.
"This is a responsible plan that pays for an increase to the unfunded pension liability -- prior plans didn't do that," Secretary of Administration and Finance Kristen Lepore told the Herald. "It's a responsible way to achieve significant savings to help close the budget gap."
Baker hopes to convince about 4,500 state workers -- out of the 13,641 eligible -- to take early retirement as he seeks to close an estimated $1.5 billion budget gap. The plan would allow workers to tack on five "free" years to their state service, or subtract them from their retirement age.
The entire plan would add $48.75 million a year to the state retirement system's unfunded liability. But Baker administration officials say the overall plan will save $178 million a year in the state budget, even after factoring in the added pension costs and other related expenses.
Baker plans to file a bill with the details tomorrow, along with his fiscal 2016 budget. But Beacon Hill leaders were reluctant to immediately support the plan yesterday.
House Speaker Robert A. DeLeo noted previous early retirement proposals were dismissed because they delivered only short-term savings, not a long-term boost.
"Having said that, I'm going to wait and see exactly how the governor words it in his particular budget," said DeLeo. "It may be something that works, and I'm hopeful that it will be. So what I'm saying is that I think the devil will be in the details."
Senate President Stanley C. Rosenberg said he also wants to dive into the specifics.
"As of right now I haven't seen enough of the details to embrace or dismiss the governor's proposal on early retirement," Rosenberg said. "I look forward to learning more once the legislation is filed, examining all aspects of the plan, and discussing it with the members of the Senate."
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