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  #1091  
Old 07-16-2018, 10:11 AM
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INVESTMENT RETURNS

https://www.plansponsor.com/asset-cl...mance-results/

Quote:
Asset Class Returns Account for Disparity in Public DB Plan Performance Results
However, the Center for Retirement Research (CRR) at Boston College found portfolio allocation did account for about one-quarter of the total 16-year underperformance for bottom quartile plans.
Spoiler:
On average, the annualized return for public defined benefit (DB) plans from 2001 to 2016 was 5.5%—well below the typical actuarially assumed return, the Center for Retirement Research (CRR) at Boston College notes in an Issue Brief.

However, the returns for plans in the top and bottom quartiles were 6.3% and 4.6% respectively—a difference the CRR says could account for roughly a 20-percentage-point disparity in their funded ratios. The differences in overall portfolio returns could result from differences in asset allocation and/or asset class returns. To understand how each factor contributed to the lower performance of plans in the bottom three quartiles, the CRR performed an analysis based on newly collected data from the Public Plans Data (PPD) website.

The analysis found that asset allocation of each group converged to be about the same over time. As of 2016, the quartile allocations to equities fell into two groups. Both the top and bottom quartiles held similar allocations—44% and 42%, respectively—while the second and third quartiles held 49% and 52%, respectively. In 2001, the allocation to fixed income ranged from 29% to 35% across the four quartiles. According to the Issue Brief, today, they all hold about 23%. In earlier years, allocations to alternatives fell into two groups. The top two quartiles each held about 12% of their assets in alternatives, while the bottom two quartiles each held about 7%. The allocation of the bottom quartile increased dramatically—to 33% today—and now aligns with the top quartile’s allocation of 32%. The second quartile increased from 6% to 27% and aligns closely with the third quartile’s allocation of 24%.

Next, the analysis looked at returns by asset class. Two key takeaways emerged. First, long-term returns for each asset class differ. For example, private equity and real estate had higher average returns than public equities over the period. The researchers say this variability suggests that the differences in asset allocation, although small, may be a factor in the quartiles’ different returns. The second takeaway is that the three lower quartiles underperform the top quartile in many asset classes—most clearly in public equities, which is the largest asset class. According to the researchers, this finding suggests that asset class returns are likely an important factor in the underperformance of lower-quartile plans.

The analysis showed the average change in the annual return when plans in the bottom quartile use the average allocation of plans in the top quartile. The researchers found no clear pattern—in some years, using the average allocation of top-quartile plans produces lower returns for the plans in the bottom quartile and, in other years, it results in higher returns. On balance, however, the gains appear to be slightly larger than the losses, suggesting that asset allocation likely played some role in the poorer performance of the bottom-quartile plans from 2001 to 2016.

The analysis also showed the average change in the annual return when plans in the bottom quartile keep their own asset allocation but achieve the average asset class returns of plans in the top quartile. The consistently higher outcome suggests that differences in returns within asset classes are a major factor in the poorer overall performance of the bottom quartile relative to the top.

When a new 16-year return is calculated based on the plan’s own asset class returns, but assuming the plan mimics the average asset allocation of plans in the top quartile, the results for the bottom quartile show that the annualized 16-year return for the top quartile was 1.54 percentage points greater than the average annualized return for plans in the bottom quartile. Applying the top quartile’s allocation to the bottom quartile increases the bottom quartile’s 16-year return by 0.38 percentage points—accounting for about 25% of the overall difference. Applying the top quartile’s asset class returns to the bottom quartile increases the 16-year return by the 1.16 percentage points.

In conclusion, the Issue Brief says, “In terms of explaining the underperformance of plans in the lower quartiles, the small differences in allocation among plans were secondary to the differences in asset class returns. While allocation did account for about one-quarter of the total 16-year underperformance for bottom quartile plans (with returns accounting for the remaining three quarters), returns accounted for almost the entire underperformance for the middle two quartiles.”

The CRR Issue Brief may be downloaded from here.
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  #1092  
Old 07-16-2018, 10:49 AM
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CALIFORNIA

https://medium.com/@DavidGCrane/the-...-i-472d52e4a90

Quote:
The Verdict On Prop 30 — Part I
>100% of schools’ share went to increased retirement spending.
Spoiler:
In January 2012 California Governor Jerry Brown announced he would ask California voters “to approve a temporary tax increase on the wealthy, a modest and temporary increase in the sales tax, and to guarantee that the new revenues be spent only on education.” Later that year his proposal was embodied in Proposition 30, a temporary tax increase projected by the Legislative Analysts Office to raise $6 billion per year for four years and smaller amounts for three years. Marketed as “Temporary Taxes to Fund Education,” P30 passed. Seven budget years later, the results are now known:

More than 100 percent of expected P30 revenue for schools went to INCREASED school spending on pensions and retiree health care costs. Eg, over the seven years of the tax increase, Fresno Unified increased retirement spending $4000 per student, 167 percent of the average expected P30 revenue per student. Outcomes were no different elsewhere:


FYE12 — FYE19 increase in retirement spending per student expressed as percentage of estimated average P30 revenues per K-12 student. FYE19 estimated.
Such outcomes were predicted before the tax increase. But elected officials chose a cover-up via tax increase. The cover-up also allowed the retirement problem to grow worse, which will produce higher costs down the road. Worse still, school retirement spending in excess of 100 percent of P30 revenues ate into other school revenues, forcing schools to lay off and underpay teachers despite record revenues of more than $16,000 per student.

It’s one thing to pay higher tax rates for better services, quite another to pay higher tax rates to fund higher retirement costs. But that’s all the state accomplished for schools by enacting P30 without first addressing retirement spending. Elected officials are continuing to seek tax increases to cover up rising retirement costs. Misled again in 2016, state voters approved an extension (Proposition 55) of the income tax portion of the P30 initiative. But that revenue will also be absorbed by growth in retirement spending because of steep already-scheduled increases in retirement costs and $230 billion of unfunded retirement obligations added in the last decade. This year San Francisco Unified enacted a regressive tax increase to cover up retirement costs that increased more than twice P30 revenues. Just imagine how many more tax increases will be sought when the current bull market ends, tax revenues decline, and retirement costs keep rising.

If elected officials really want to help schools they can — and should — act right now to reform retiree health care, the costs of which are fast adding to school district pension woes. Doing so would free up billions of dollars that could actually improve schools. Needless to say, any school district asking for higher taxes should first be required to reform retirement spending.

Part II will address other consequences of P30.
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  #1093  
Old 07-16-2018, 10:51 AM
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CHICAGO, ILLINOIS

http://www.wirepoints.com/why-chicag...ces-isnt-real/

Quote:
Why Chicago's Reported Progress On Pensions And Finances Is Fake
Spoiler:

By: Mark Glennon*

Chicago is bragging about reducing its unfunded pension liabilities and progress shown in its new financial statements. In fact, the city merely changed assumptions used to measure its pension debt. That change covered up what otherwise would have been another very bad year.

The assumption changes had a whopping impact of about $7.7 billion on the pensions, supposedly reducing their unfunded liabilities from $35.7 billion to $28 billion. And that $7.7 billion helped cover up losses on the city’s overall position. However, there was little or no economic logic or common sense supporting the new, rosy assumptions.

Here are a few headlines from last week on Chicago’s CAFR for 2017 — its annual, audited financial statements — that might have cheered Chicagoans up:

From the Chicago Sun-Times.” City audit shows improving financial picture, declining pension obligation,”

From the Chicago Tribune headline.”Mayor Emanuel cuts Chicago pension debt but hit to future taxpayers are still expected.”

Even The Bond Buyer had a positive headline, “Chicago makes headway on digging out from fiscal hole.”

What actually happened is that two Chicago pensions simply increased the discount rate used to calculate the health of two of its four pensions, the Municipal Fund (MEABF) and the Laborers Fund. The discount rate assumption is key because it basically represents how much the pensions are expected to earn on the investments they hold.

That change in assumptions allowed the city to say, as reported by the Tribune, that as of the end of 2017 Chicago “was about $28 billion short of what’s needed to cover future pension payments to retired city workers. That debt was about $7.7 billion less than at the end of 2016.” (The Tribune did, however, discuss the accounting gimmicks to some extent.)

In fact, the assumption changes account for the entire $7.7 billion of supposed reduction in the city’s unfunded pension liabilities. That’s despite a banner year in the stock market, which most pensions enjoyed in 2017. Chicago’s pensions earned over 14%.

And those supposed pension improvement feed into the bottom line on the current and future financial statements. Consequently, the loss Chicago suffered for the year would have been much larger without the assumption change — much worse than they have typically been over the last ten years.

Wait, you might say if you’ve been following the pension crisis. Aren’t pensions everywhere cutting their discount rate to reflect more realistic assumptions about how much their investments will earn?

Yes, and here’s why Chicago justifies doing the opposite. MEABF and the Laborer’s Fund already cut their discount rate heavily in 2016, which had a huge, negative impact on their position. Reporting at the time properly attributed the pensions’ loss to the assumption change (driven by a change in accounting rules), as we did here.

But this year MEABF increased its rate from 3.91% to 7% and the Laborers Fund increased is rate from 4.17% to 7%, close to where the rates were originally.

What was their justification for that? The new taxpayer contribution schedule that became law, say the accountants in the CAFR.

We’ve written about that schedule before. Rahm’s Ramp, as we called it, provides for gradually increasing contributions by the city to the pensions, ultimately going to a sort of ARC payment, which is the supposed actuarially required contribution.

But does it make any sense to change the assumed rate of return on investments because of that? Does a new ramp mean the pensions now are $7.7 billion better off? No. Nothing about the pensions really changed. Pension promises were not reduced. The rationale wasn’t that the pensions have more assets on hand or rosier expectations about the markets.

The justification was only based on a new ramp, and up-ramps in scheduled pension contributions are routinely busted. Both Chicago and the State of Illinois have regularly gotten the law changed to kick the can by pushing ramps out further when the time comes to pay up. Now, somehow, the city, its accountants and actuaries think a new ramp justifies what is effectively a $7.7 billion write-up for the pensions.

And Chicago certainly hasn’t told anybody how it intends to fund those ever-higher contributions. Though some tax and fee increases have been passed, the bulk of the future bill remains to be addressed. Rahm admitted that last November, saying he will deal with it when the time comes.

Now, let’s turn to the bottom line of the financial statements for the city as a whole.

The city’s loss for the year would have been much worse but for the assumption changes, because those supposed pension improvements were partially used to prop up the bottom line.

Chicago reported what is basically a net loss of $938 million for the year on an accrual basis. It’s call Change in Net Position. That’s a bit lower than losses reported for most of the past nine years, which have typically been a little over $1 billion (although the losses were much worse in 2015 and 2016, mostly because of the pension assumption changes going in the opposite direction from 2017). On the surface, therefore, 2017 looks like improvement.

But the $7.7 billion of supposed improvement in the pensions pulled up the bottom line. It gets spread out over five years for purposes of calculating Change in Net Position. So, the loss would have been $1.5 billion worse but for the pension assumption changes, taking the city’s loss for 2017 to about $2.4 billion.

That’s hardly good news. It’s worse than the ten-year trend, which was already awful.

And the city will use another $1.5 billion for another four years to likewise cover up losses.

Wait once again, you might say. Didn’t Chicago tell us its 2017 budget was balanced, as the law requires? Yes, of course it did. Rahm’s gleeful press release on that is linked here. This is just another example of how governments can bleed red ink even when operating under supposedly balanced budgets.

For those interested in seeing the numbers and details yourselves, go to the one line that matters most in the 228-page CAFR. It’s the Assumption Changes line on page 91. MEABF and the Laborer’s fund are assumed to have improved drastically.

The Bond Buyer article includes some discussion of the impact of the assumption change. “This is more of an accounting change than an actual multimillion-dollar benefit,” says Howard Cure, director of municipal bond research at Evercore Wealth Management LLC in the article.

Cure added another hugely important point about how badly Chicago’s pension underfunding will continue even under the new ramp: “Additionally, the measure also includes a 40-year amortization period to reach a 90% funded ratio. This locks the city into negative amortization for many years as contributions into the plan won’t even cover the interest on the unfunded liability, causing it to continue to grow over that horizon.”

In other words, even under the new ramp Chicago’s pension hole will continue to grow. We don’t know when true improvement would actually occur under the new ramp because the city has never shared full projections.

Even with the assumption changes, all of Chicago’s pensions remain in horrible condition. As of the end of last year, the funding ratios for MEABF, the Laborer’s Fund, police and firefighters’ funds are 28%, 48%, 23% and 20%, respectively.

Chicago has claimed other areas of progress it says are reflected in it’s CAFR, though none has nearly the magnitude of the pension progress it claims. Maybe those other positive developments are real or maybe they are not. I haven’t checked them out.

Personally, however, I don’t trust anything the city says unless it’s independently scrutinized, given chapters like this in its history with budgets, pensions and financial reports. Especially with a mayoral election coming up.
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  #1094  
Old 07-16-2018, 01:18 PM
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http://www.wirepoints.com/r-i-p-jeremy-gold/
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  #1095  
Old 07-16-2018, 04:05 PM
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Quote:
Originally Posted by DES View Post
For outsiders who come to the AO only for this thread (and I know a few do), here is our RIP Jeremy Gold thread:
http://www.actuarialoutpost.com/actu...d.php?t=333768

Jeremy Gold's Greatest Hits:
http://www.actuarialoutpost.com/actu...d.php?t=333778

I made a blog post putting this stuff together:
http://stump.marypat.org/article/103...arial-memorial
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  #1096  
Old 07-16-2018, 04:09 PM
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CONSTITUTIONALITY OF CUTTING PENSIONS

http://www.wirepoints.com/an-importa...sis-quicktake/

Quote:
An important new paper by legal expert on federal courts and Illinois fiscal crisis - Quicktake
Spoiler:
James Spiotto is a nationally recognized legal expert on insolvency. At an upcoming Brookings Institute conference on municipal finance, he will be delivering a significant new paper, with an appropriately long title: “When Needed Public Pension Reforms Fail or Appear to Be Legally Impossible, What Then? Are Unbalanced Budgets, Deficits and Government Collapse the Only Answer.”

The paper is linked here.

It’s for legal and policy wonks, but it’s important, primarily because it lays out the case for why federal courts can and should play a role in solving state and local fiscal crises, particularly in Illinois.

Much of it supports precisely what I wrote in my Crain’s article this month. When basic government services begin to fail, as they are in parts of Illinois, federal courts will recognize a “police power” that trumps other state and federal constitutional limitations.

The paper also contains model guidelines for a constitutional amendment on pension funding where state constitutional and statutory provisions and court rulings appear to prohibit or impair needed pension reform. I haven’t fully thought through those model guidelines and can’t say whether I agree with all of it, but they’re clearly well thought out and conformed to Spiotto’s reading of existing precedent.

–Mark Glennon is founder and executive editor of Wirepoints.
https://www.brookings.edu/wp-content...otto-J.-v8.pdf
Quote:
When Needed Public Pension Reforms
Fail or Appear to Be Legally Impossible,
What Then?
Are Unbalanced Budgets, Deficits and
Government Collapse the Only Answer?
James E. Spiotto
May 30, 2018


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  #1097  
Old 07-17-2018, 09:23 AM
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NEW YORK
DIVESTMENT

http://www.pionline.com/article/2018...17#cci_r=73393

Quote:
New York State Common divests publicly traded prison holdings
Spoiler:
New York State Common Retirement Fund, Albany, has divested its holdings in publicly traded prison companies.

Comptroller Thomas DiNapoli, the sole trustee of the $206.9 billion pension fund, "approved an updated restriction policy for investments in private prison companies, Jennifer Freeman, a spokeswoman for Mr. DiNapoli, wrote in an email. "The updated policy applies to all asset classes of the New York State Common Retirement Fund and will eliminate the fund's direct holdings in private prison companies."

The pension fund's holdings totaled $9.6 million: $3.8 million in CoreCivic Inc. and $5.8 million in The Geo Group Inc., Ms. Freeman wrote. "Because of the limited size of these holdings, imposing these restrictions will not negatively impact the fund," she wrote.

The pension fund has restricted investments in private prisons since 1999, she added. Mr. DiNapoli recently updated the list of companies subject to the restrictions

New York State and New York City prohibit private prisons. The $194 billion New York City Retirement Systems divested its private-prison holdings 13 months ago.
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Old 07-17-2018, 09:57 AM
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INSOLVENCY

https://www.bondbuyer.com/news/how-t...ension-systems

Quote:
How to deal with insolvent public pension systems

Spoiler:
WASHINGTON — Congress should consider creation of a special federal bankruptcy court to help states and localities deal with insolvent public pension systems, says James Spiotto, managing director of Chapman Strategic Advisors.

His proposal is part of a four-pronged approach to the growing problem of underfunded state and local retirement systems in a paper scheduled for delivery here on Tuesday at the Brookings Institution’s 7th Annual Municipal Finance Conference.

Spiotto said in an interview that the main takeaway from his paper is that states and localities can’t continue to postpone resolving their pension problems.

James Spiotto
James Spiotto
“If you do that and crowd out essential services and infrastructure, you are going to wind up losing population, corporations and losing your tax base,” he said.

His proposed Pension Fund Bankruptcy Court would be composed of judges who understand municipal finance.

“You want a specialized court because this is a specialized problem,” Spiotto said, adding that the idea is something he’s “been kicking around” for some time, but hasn’t presented to any members of Congress.

Deficits in state pension plans grew by $295 billion in fiscal 2016 to $1.4 trillion, Pew Charitable Trusts reported in April.

Retirement systems in five states — Colorado, Connecticut, Illinois, Kentucky and New Jersey — were under 50% funded, Pew reported.

Another nine in Arizona, Hawaii, Massachusetts, Minnesota, Mississippi, New Hampshire, Pennsylvania, Rhode Island and South Carolina were funded at 60% or less.

Only four states — New York, South Dakota and Wisconsin — were at least 90% funded.

Spiotto suggests that, in addition to having access to a new federal bankruptcy court, financially troubled municipal pension systems also should consider filings prepackaged Chapter 9 bankruptcy reorganizations.

These pre-packaged plans, which he envisions being confirmed by a court in 45 to 90 days, would be similar to the prepackaged Chapter 11 reorganizations used by corporations to save time and money.

“Municipalities authorized by their states to file Chapter 9 should consider using such an approach to provide effective pension reforms where efforts at voluntary reform fail and state courts are hostile to reform efforts,” Spiotto wrote. “This prepackaged Chapter 9 municipal debt adjustment plan can provide the needed pension obligation reform to save the municipality, its taxpayers, public workers, retirees and creditors.”

States, however, are not eligible for filing for Chapter 9 and less than half the states allow their municipalities to file for Chapter 9.

Spiotto has two other alternatives that could be accomplished at the state level.

One is to create model guidelines for state constitutional amendments. The other is to create a Government Oversight, Refinance and Debt Adjustment Commission (GORDAC) to assist where public pension reform is otherwise legally or practically impossible.

“GORDAC would be created by state legislation as a quasi-judicial commission initiated through either voluntary petition by affected parties,” Spiotto writes.

Spiotto’s GORDAC is an amalgam of the best practices in states that already have taken action through the creation of control boards or other oversight bodies.

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Twenty out of 26 major court decisions on state and local pension reform since 2009 have upheld reductions in retirement benefits with many of them citing the higher public purpose of assuring funding for essential government services, Spiotto’s paper notes.

But courts in Illinois, California, Oregon, Montana and Arizona have ruled against certain cuts for various reasons that Spiotto’s paper details.

The paper explains that the reasons for underfunding of state and municipal pension plans includes economic downturns, lack of economic growth, population losses, flight of businesses and the increased costs of public services.
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  #1099  
Old 07-17-2018, 09:58 AM
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PENSION FORFEITURE

https://www.bostonglobe.com/opinion/...U1H/story.html

Quote:
Pension punishments should fit the crime

Spoiler:
Should the punishment fit the crime? It’s a fairly basic proposition, no? And yet for decades the laws governing how the Massachusetts public pension system handles employees who commit crimes has instead been an all-or-nothing proposition.

A bill to provide a more thoughtful and nuanced approach — a bill made essential following two controversial Supreme Judicial Court opinions — should be a priority in these waning days of the 2018 legislative session.

Make no mistake, this is no soft-on-crime giveaway to those who have already betrayed the public trust, especially those who have dipped into public funds. But its proposed three-tiered approach provides a measure of fairness not found in current law.

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Under the bill, public retirement boards — and there are more than 100 of these in the state — could still cut the benefits of a criminally convicted retiree entirely, or by two-thirds, one-third, or to a “minimum allowance” (defined as the amount a worker would receive after 10 years of service and retiring at age 55).

It also provides automatic pension forfeiture for those convicted of offenses involving child pornography or any sex offense involving a child by those “whose primary job responsibilities involve contact with children,” including any member of the Massachusetts Teachers Retirement System or Boston teachers covered under the city’s system.

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Gregory Raftery regularly left shifts early or failed to show up for them at all, but still collected the extra cash. The guilty plea comes days after three additional troopers were indicted for similar alleged fraud.

Read: Some criminally convicted retirees could keep more of their pensions under new proposal
That’s something the teachers’ retirement system has pushed for since a 2014 SJC decision that allowed a retired ninth-grade science teacher to keep his entire pension because the kiddie porn was discovered on his home computer.

Also influential was a 2016 high court decision in the case of a Peabody police officer convicted of the misdemeanor offense of accessing online the Civil Service exam scores of 21 fellow officers, which spurred the Legislature’s creation of a Special Commission on Pension Forfeiture that in turn drafted the current bill.

The court said in that case that making Officer Edward Bettencourt forfeit his entire pension was so excessive that it constituted a violation of the US Constitution’s Eighth Amendment protection against excessive fines.

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Faced with the all-or-nothing nature of the state’s system, the court recommended that the Legislature “establish a wholly different forfeiture sys-tem.”

Under the proposed law, pension boards would have to consider “the severity of the crime,” the amount of money involved, “the degree of public trust” that was violated, the recommendation of the prosecutor and, “if the crime was part of a fraudulent scheme against the state or political subdivision, the role of the member in the fraudulent scheme.”

The Legislature should not delay in making such long overdue changes in a system that cries out for reform.
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Old 07-17-2018, 10:13 AM
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NON-DOUBLE-DIPPING

https://www.masslive.com/news/index....ayor_mich.html

Quote:
Former Springfield Mayor Michael Albano gives up $57,378 city pension during new state job
Spoiler:
SPRINGFIELD -- Former Springfield Mayor Michael J. Albano, who took a $101,000-a-year state job in May, has given up his annual city pension of $57,378.60, according to city records.

The city's retirement office said Albano waived his monthly pension of $4,781.55 as of May 7, halting the payments.

That coincides with Albano taking a full-time job as a member of the Board of Review at the state Department of Unemployment Assistance. The city pension will remain halted during the length of his employment and does not accumulate. It will resume when and if he retires.

"This is the right way to do it so there is no double dipping," Albano said Friday. "In fact, if you do the math, I'm essentially working for $44,000 a year."

Albano said he was referring to his current annual salary minus the yearly pension.

A city retirement office official, speaking in general terms, said that when a person takes a public pension, there are limits on how many hours the person can work in the public sector. Retirees can waive their pension in order to continue working without the limits on their hours, she said.

Michael Albano lands $101,000 state government job
Michael Albano lands $101,000 state government job

Albano was appointed by Gov. Charlie Baker as a member of the Board of Review at the Department of Unemployment Assistance.


Albano, 67, filed for early retirement Dec. 19, 2003, approximately two weeks before finishing his fourth two-year term as mayor. Albano chose not to seek re-election, leaving amid an FBI investigation into public corruption that sent members of his administration to prison.

The former mayor filed for the early retirement as Springfield was mired in a financial crisis. The early retirement program had been approved by the City Council just months after mass layoffs in the city, and months before state officials appointed a Finance Control Board to run the city and restore it to financial stability.

Albano was among 64 city employees who took early retirement in December of 2003. That also included four department heads as well as police officers and firefighters. At that time, it was expected that the city would save approximately $1 million by filling as few vacancies created by the retirements as possible.

Albano has nearly 40 years of public service and employment with the city, county and state, dating back to the 1970s, with some positions overlapping.

He was hired as a probation officer in Westfield District Court in 1974, and served as a state parole board member from 1982-93. After serving on the School Committee and City Council in Springfield, he was mayor for eight years from 1996-2004 and served on the Governor's Council for four years, ending in 2017 after an unsuccessful run for Hampden County sheriff.

Albano's public pension is based on years of service before his retirement, specifically: 10 years and nine months of city service, three years and five months of service with Hampden County and 16 years and five months of service with the state, said Susana Baltazar, executive director of the Springfield Retirement Department. County government was taken over by state government years ago.

Albano did not have a state pension before taking his new job, nor will he have a state pension, according to Albano and records from the state retirement system.

His new state job is considered full-time, with a six-year term. The three-member Board of Review hears appeals of decisions by the commissioner of unemployment assistance.

"I have no plans to retire," Albano said.

Albano said he also gave up his city health insurance, replaced by state insurance.

Gov. Charlie Baker, a Republican, appointed Albano, a Democrat, to the state job. A spokeswoman for Baker said Albano was chosen in part based on his decades of public service experience.

Albano said he did not support Baker's campaign for governor in 2014, but is honored to work for him, calling Baker "the best governor the commonwealth has seen."

Albano described his state job as "quasi-judicial, in essence an administrative judge."

"My whole life has been working around the issues of labor and working families," Albano said. "I've been a union steward, I've negotiated contracts as mayor, I've been around unions all my life, so it's somewhat of a natural fit."
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